ENTEQ TECHNOLOGIES PLC
ANNUAL REPORT
FOR THE YEAR TO 31 MARCH 2023
REGISTERED NUMBER: 07590845 (England and Wales)
Contents
Key features, Financial Metrics and Outlook
Company Information
Strategic Report:
Combined Chief Executive and Chairman’s report
Financial Review
Review of Principal Risks and Uncertainties
Corporate Governance:
Environmental, Social, and Governance report
Report of the Directors
Remuneration Committee Report
Corporate Governance Report
Financial Statements - Group:
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Financial Statements - Company:
Company Statement of Financial Position
Company Statement of Changes in Equity
Page
2
4
5
9
12
15
17
20
24
29
34
35
36
37
38
69
70
Notes to the Company Financial Statements
71
- 76
1
Key features, Financial Metrics and Outlook
Key features
• Total revenue $6.2m ($7.3m for year ended 31 Mar 2022)
• Cash balance increased to $5.4m (2022: $4.8m)
• Sale of Real Estate facility in Houston for $2.5m
• Post year-end sale of XXT intellectual property and assets for up to $3.16m (Initial cash consideration of
c.$1.89m plus up to c.$1.27m to be paid in cash over a 12-month period).
• Continued investment in SABER project ($2.6m)
• The SABER Tool (SABER), successfully completed downhole drilling testing, with the system proven to be
effective in an operational environment.
Financial metrics
Years ended 31 March ($m):
2023
2022
Continued
operations
Discontinued
operations
Continued
operations
Discontinued
operations
Revenue
Gross profit margin
Underlying overheads **
Adjusted EBITDA
Exceptional items
Total post tax profit/(loss)*
Post tax profit/(loss) per share (cents)
Cash balance3
Investment in engineering projects
*prior to intercompany interest charges
**all central costs alloocated to the continued operation
0.0
0.0
(1.5)
(1.5)
0.0
(1.4)
(2.0)
5.4
2.6
6.2
23%
(1.1)
0.3
(0.5)
(1.4)
(2.0)
0.0
0.0
0.0
0.0
(1.3)
(1.3)
0.0
(1.6)
(2.2)
4.8
2.7
7.3
36%
(1.0)
1.6
0.0
0.8
1.1
0.0
0.0
Outlook
• Ongoing investment in the development and deployment of technologies with significantly
enhanced market size and differentiation.
• Emphasis on maintaining a strong balance sheet.
2
1 The reconciliation between Underlying overheads and Administrative expenses before amortisation is follows:
Total underlying overheads
Depreciation - fixed assets
Depreciation - rental fleet
PSP Share charge
Administrative expenses before amortisation
Year to 31 March 2023
$m
2.6
0.2
0.6
0.2
8.6
Year to 31 March 2022
$m
2.3
0.2
0.5
0.2
3.2
2 The reconciliation between Loss attributable to shareholders and Adjusted EBITDA is follows:
Loss attributable to shareholders
Exceptional items
Amortisation
Depreciation - fixed assets
Depreciation - rental fleet
PSP Share charge
Tax
Interest
Adjusted EBITDA
Year to 31 March 2023
$m
(2.8)
0.5
0.4
0.2
0.6
0.2
(0.3)
-
(1.2)
Year to 31 March 2022
$m
(0.8)
-
0.2
0.2
0.5
0.2
-
-
0.3
Both the above alternative performance measures are shown as the Board consider these to be key to the management as the business as a
whole.
3 The cash balance includes:
Cash and cash equivalents
Bank deposits
Cash balance
Year to 31 March 2023
$m
5.4
-
5.4
Year to 31 March 2022
$m
3.3
1.5
4.8
3
Company Information
For the year to 31 March 2023
DIRECTORS:
Chairman
Martin Perry
Executive Directors
Chief Executive Officer
Andrew Law
David Steel (resigned 16th June 2023)
Chief Finance Officer
Mark Ritchie (appointed 16th June 2023) Chief Finance Officer
Non-Executive Director
Neil Hartley
Iain Paterson
Chairman of the Remuneration and Audit Committees
Chairman of Nomination Committee
SECRETARY
David Steel (resigned 16th June 2023)
Mark Ritchie (appointed 16th June 2023)
REGISTERED OFFICE
The Courtyard
High Street
Ascot
Berkshire
SL5 7HP
REGISTERED NUMBER
07590845 (England and Wales)
AUDITORS
Gravita Audit Limited
Registered Auditors
Finsgate, 5-7 Cranwood Street
London
EC1V 9EE
NOMINATED ADVISER & BROKER
Cavendish Capital Markets Limited
1 Bartholomew Close
London
EC1A 7BL
LEGAL ADVISORS
CMS Cameron McKenna Nabarro Olswang LLP
Cannon Place
78 Cannon Street
London
EC4N 6AF
REGISTRARS
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
4
Strategic Report
The above starts with the combined Chief Executive and Chairman’s report and continues to the end of the
Review of the Principal Risks and Uncertainties.
Combined Chief Executive and Chairman’s report
Introduction
Enteq develops and provides downhole electronics and technologies for measurement, data and control, which
are used by the geothermal, methane capture, oil and gas sectors around the world.
Specialist directional technologies, including Rotary Steerable Systems (RSS) and Measurement While Drilling
(MWD) are used by service companies around the world who either purchase or rent equipment from third parties
such as Enteq or develop systems themselves.
The international RSS market is the target for new Enteq technology and is currently estimated at over $2bn
annually.
Enteq has a proven track record of providing extremely reliable and respected technology to regional and
independent service companies globally. Enteq is commercialising game-changing technologies to deliver
improvements in efficiency, operating cost and reduced environmental impact in drilling. Enteq’s SABER
technology is a novel RSS originated by Shell and subsequently developed by Enteq under an exclusive IP and
technology license agreement.
Enteq now has a rented operations facility in Houston, (having sold a free-hold in year-ending March 2023) and
a technology centre in the UK. International business is supported through a network of sales team
representatives.
Enteq plans to maximise growth through the commercialisation of SABER and associated technologies in the
substantial (over $5bn) global directional drilling market.
Sale of XXT
The sale is a result of a strategic focus to improve the Company's medium term cash position to underpin
investment in product line development, primarily the deployment of SABER, the rotary steerable drilling
solution.
The XXT intellectual property (previously amortised over time to a book value of nil) and associated product
lines and trademark, together with selected technology agreements, customer account receivable balances, and
inventory have been sold for a cash consideration of c.$1.89m; further selected customer account receivables
and inventory have also been sold for up to c.$1.27m to be paid in cash over a 12 month period.
The disposal reflects Enteq's focus on differentiated specialist MWD technologies, and the rotary steerable sector
(SABER) where there is a larger addressable market.
5
Review of the Year
This year has been one of increasing the focus on the SABER technology development project, resulting in a
critical milestone being successfully accomplished.
The SABER development project has progressed well during the year with the most important milestone being
the successful completion of downhole drilling testing, proving that the unique concept underpinning SABER
can steer effectively in operational conditions. A simplified design of the SABER control system was
implemented during the year, to widen the operating range and to improve operating effectiveness.
Continued customer and industry engagement on the SABER project confirmed there is a high degree of appetite
for this technology. SABER remains on-track for commercialisation during 2023, with existing resources in
place to complete the remaining phase of the development project.
As a result of a strategic focus to improve the Company's cash position to underpin investment in the
development of SABER, Enteq sold the freehold property in South Houston for $2.5m and sold the XXT
intellectual property and associated assets for an initial cash consideration of $1.89m (with selected account
receivables and inventory for up to c.$1.27m to be paid in cash over a 12-month period).
As significant overhead reductions were made in recent years, the underlying overheads have remained steady
in comparison to the previous year.
The year’s financial results are fully explained in the Financial Review of pages 9 to 11.
Staff
There was a total of 13 employees at the end of the year, down from the 16 at the previous year end. The Board
would like to recognise the on-going loyalty, dedication and support of the staff as Enteq continues with its
excellent reputation for the reliability of equipment and commitment to customer support.
Reporting & performance indicators
A set of Key Performance Indicators are in place. These are reported weekly to senior management who review,
initiate action where required and follow-up. The following Key Performance Indicators, unchanged from the
previous year, are used:
Financial:
• Revenue, gross profit margin, adjusted EBITDA and capital expenditure.
Other performance measures:
• Progression of technology development
• Headcount and number of reportable Health and Safety Executive (“HSE”) incidents.
Key market indicators regularly monitored by management and Board of Directors include: Global Rig Count,
North American Rig Count, both WTI and Brent Oil Prices and Henry Hub Natural Gas Price.
Governance
Enteq is committed to maintaining high standards of Corporate Governance, as such on 10 July 2018, the Enteq
Board formally adopted the Quoted Company Alliance Code of Corporate Governance. More details are given
on page 24.
6
Section 172 Statement
Section 172 of The Companies Act 2006 states that a director of a company must act in the way it considers, in
good faith, would be most likely to promote the success of the company for the benefit of its members as a whole.
In doing so a director of a company must have regard (amongst other matters) to:
a. The likely consequences of any decision in the long term;
b. The interests of the company’s employees;
c. The need to foster the company’s business relationships with suppliers, customers and others;
d. The impact of the company’s operations on the community and the environment;
e. The desirability of the company maintaining a reputation for high standards of business conduct; and
f. The need to act fairly as between members of the company.
The Board reviewed their current approach to corporate governance and decision making, engagement with
stakeholders and the Company’s impact on the environment. The following summarises how the Company’s
Board fulfils its duties under Section 172.
Decision Making
The Board ensures that strategic initiatives feed directly into one or more of the following fundamental ambitions
- to be simple to do business with; to be at all times customer oriented and inspire trust; and to achieve operational
excellence; as well as agility, speed and innovation. The Board review and consider the various stakeholders
when arriving at recommended business decisions consistent with the strategy. The Company strategy aims to
be competitive, flexible and resilient while also responding to a rapidly changing market situation. All decisions
are reviewed at each Board meeting and specifically at the annual Strategic Review. Examples of Board decision
making during this reporting period include:
Reviewing of the skill set within the SABER team to maximise the chances of successfully
Continuing to review the Board’s response to Russia’s invasion of Ukraine
Reviewing the company’s operational structure to ensure the organisational model remains fit for the
•
•
future; this included the streamlining of staff numbers and re-allocation of responsibilities.
•
introducing this new product line.
•
Reviewing the Group’s long-term strategic objectives. The progress made during the year and
principal risks to these objectives have been addressed both in the Strategic Report and the Review of
Principal Risks and Uncertainties.
Employee Engagement
The Board recognises that the staff are the most valuable asset in the group. The company strives to invest in
training, coaching, and skills acquisition, but given the size and the current team and the market conditions
experienced during the year, this has proved a challenge. However, personal development of our employees
remains a key pillar of the Company’s strategy. The Board aim to be a responsible employer in the approach to
the pay and benefits of employees. Furthermore, the health, safety and wellbeing of the staff is one of the primary
considerations in the way the company does business.
Examples of the Board’s engagement with employees this reporting period include:
Holding staff briefings on both the full year and interim results;
Requesting that all employees to participate in the monthly health and safety meetings; and
Reviewing the output of each of these meetings at Board meetings.
•
•
•
.
Business Relationships
The Board engages with a variety of stakeholders, including shareholders, customers, and suppliers, to inform
and enable balanced decisions that incorporate multiple viewpoints, whilst maintaining the Company’s Strategy.
In making decisions the Board considers outcomes from engagements with stakeholders as well as the
importance of maintaining the Company’s integrity, brand and reputation.
Examples of the Board’s engagement with stakeholders reporting period include:
Receiving regular customer service performance updates and feedback from customers to assist in
•
decision making regarding customer focused initiatives;
• Working with both suppliers and customers to assist where these stakeholders may be experiencing
cashflow difficulties due to prevailing market conditions; and
•
investors to understand the strategic direction of the company.
Holding regular meetings with shareholders to explain both the full year and interim results to assist
7
Community and Environment
Sustainability is an increasing focus within all the Group’s activities. The Board recognises the relevance of
leading the company in such a way that it contributes to wider society. Again, given the size of the current team
making a meaningful contribution has proved a challenge. However, during the period under review there have
been:
•
materials re-cycled.; and
•
regular reviews on minimising waste production and energy usage and maximising the volumes of
contribution of excess furniture and office equipment to local church and charity organisations.
Culture and values
The company’s culture is characterised by clear responsibility, mutual respect and trust. Lawful conduct and fair
competition are integral to its business activities and an important condition for maintaining a reputation for high
standards of business conduct in order to secure long term success. The company is focused on people, with both
customers and employees being at the heart of its business. The company embraces diversity, flexibility,
sustainability and continuous improvement throughout the organisation. The company has a customer centric
philosophy with transparent, fair and simple processes. The Board and senior management have taken active
steps to drive cultural change and to ensure corporate strategy and customer orientation principles and values are
embraced across the organisation.
Prospects
Enteq has continued investment in the SABER RSS project development, having achieved successful downhole
drilling field test performance, to significantly reduce the technical risk. Sustained testing has confirmed that the
system has performed to the design criteria and met all requirements to date.
Continued engineering of the project has resulted in an enhanced, simplified design with a wider range of
operation and a low cost to operate.
Extensive industry engagement with existing and new customers and partners, both internationally and across
North America, has confirmed that SABER is on-track to meeting the market requirements.
Martin Perry
Chairman
Andrew Law
Chief Executive officer
29 September 2023
8
Financial Review
Income Statement
This is a pro-forma statement which is different in presentation to the statutory format shown on page 34.
Year to 31 March:
Revenue
Cost of Sales
Gross profit
Overheads
Adjusted EBITDA
Depreciation &
amortisation
Other charges
Ongoing operating loss
Exceptional items
Operating Loss
Interest
Loss before tax
Tax
Loss after tax
Continued
2023
$ million
0.0
Discontinued
2023
$ million
6.2
Continued
2022
$ million
0.0
Discontinued
2022
$ million
7.3
0.0
0.0
(1.5)
(1.5)
0.0
(0.2)
1.7
(0.0)
(1.7)
-
(1.7)
0.3
(1.4)
(4.8)
1.4
(1.1)
0.3
(1.2)
0.0
(0.9)
(0.5)
(1.4)
-
(1.4)
0.0
(1.4)
0.0
0.0
(1.3)
(1.3)
0.0
(0.3)
(1.6)
0.0
(1.6)
-
(1.6)
-
(1.6)
(4.7)
2.6
(1.0)
1.6
(0.8)
0.0
0.8
0.0
0.8
-
0.8
-
0.8
The North American market saw a steady increase during the year with the rig count rising from 673 as at 31
March 2022 to 758 as at 31 March 2023 , an increase of 85 (13%). This compares to an increase 243 (57%) in
the previous year. This was against a background of the price of a barrel of WTI falling during the year to 31
March 2023 from $104 to $73 compared to a rise from $64 as of 31 March 2022. The oil price was at levels
during the year under review to be profitable for the operating companies that require the services of Enteq’s
customers.
North American revenue was steady at $5.8m compared to the $6.2m reported last year. The North American
revenue was largely driven by demand for specific third-party technologies, with revenues deliberately controlled
by the Company to maintain working capital efficiency. The international market continued to experience
challenges of capital availability, with international revenue at $0.4m, down from the $1.1m reported last year.
The full year gross margin was 23%, down from last year’s 36%, due to an increasing proportion of revenue
coming from the third party components mentioned above.
Total underlying overheads, at $2.6m, (2022: $2.3m). This reflected the concentration on reducing all levels of
overheads in previous years without impacting the level of customer support given.
The combined depreciation and amortisation charge was up on the previous year due to an increased level of
amortisation on previously capitalised software enhancements plus a higher level of depreciation on both the
rental fleet and the underlying assets.
The “Other charges” shown above relate, primarily, to the non-cash cost associated with the Performance
Share Plan.
9
Statement of Financial Position
This is a pro-forma statement which is different in presentation to the statutory format shown on page 36.
Enteq’s net assets at the financial year-end comprised of the following items:
As at 31 March:
Intangible assets
Property, plant & equipment
Rental fleet
Net working capital
Assets held for sale
Cash balance
Net assets
2023
$million
6.4
0.1
-
(1.0)
2.2
5.4
13.1
2022
$million
4.1
2.2
0.3
4.1
-
4.8
15.5
Both the closing balance and the increase in the year in the intangible assets relate to the on-going spend on the
SABER rotary steerable system.
The net book value of property, plant & equipment at $0.1m is $2.1m down primarily due to sale of the freehold
Houston site plus the annual depreciation charge.
The reduction in net book value of the rental fleet reflects the disposal of all the rental kits during the year.
The net working capital of $(1.0m) has decreased by $5.1m during the year. This is primarily due to a decrease
in all major components; debtors down by $2.6m; inventory down $2.4m countered by creditors down $0.6m.
All these movements relate to the strategic decision to move away from the lower margin MWD market and no
longer offering extended credit terms to the major customers.
Cash flows
This is a pro-forma statement which is different in presentation to the statutory format shown on page 38.
Overall, the Group saw a net cash inflow of $0.6m (2022: outflow of $3.3m) increasing the Group’s closing
cash balance as at 31 March 2023 to $5.4m. The major elements of the non-operational cashflow relates to the
$3.0m of on-going investment in the engineering projects, primarily the SABER tool and the disposal of the
freehold Houston site for a net $2.3m.
Year to 31 March:
Adjusted EBITDA
Change in net operational working capital
Operational cash generated
Net investment in rental fleet
Investment in engineering projects
Investment in fixed assets
Interest and share issues
Disposal of fixed assets
Net cash movement
Opening cash balances
Closing cash balance
2023
$ million
(2.0)
2.9
0.9
-
(2.6)
-
-
2.3
0.6
4.8
5.4
2022
$ million
0.3
(0.2)
0.1
(0.8)
(2.7)
(0.1)
0.2
-
(3.3)
8.1
4.8
10
Financial Capital Management
Enteq’s financial position continues to be robust. Enteq had no bank borrowings, or other debt, and had a closing
cash position of $5.4m as at 31 March 2023 ($4.8m as at 31st March 2022).
Enteq monitors its cash balances daily and operates under treasury policies and procedures which are set by the
Board.
The financial statements are presented in US dollars as the Company’s primary economic environment, in which
it operates and generates cash flows, is one of US dollars. Apart from its UK based overhead costs, substantially
all other transactions are transacted in US dollars.
Enteq is subject to the foreign exchange rate fluctuations to the extent that it holds non-US Dollar cash deposits.
The year-end GBP denominated holdings are approximately 3% of total cash holdings, down from the 5% of last
year’s balance.
Annual General Meeting
The Company’s Annual General Meeting will be held on 29 September 2023 at 11am at the offices of Cavendish
Capital Markets, 1 Bartholomew Close, London, EC1A 7BL.
Mark Ritchie
Chief Financial Officer
29 September 2023
11
Review of Principal Risks and Uncertainties
The Board is responsible for the Group's risk management and during each year undertakes a systematic review
of the key risks and uncertainties which face the Group. The Board establishes the framework for risk
management across the Group. It seeks to embed risk management and to facilitate the implementation of risk
management measures throughout the Group’s businesses. The Board refines its view of risks on an on-going
basis and as the Group’s businesses enter new markets and develop new products. Both the risk register and
associated risk matrix are regularly updated and reviewed by the Board, the last review being in April 2023.
The principal risks are those shown first in each section together with a comment regarding the movement in
risk during the year.
The Directors believe the following risks, as set out in the Risk Register, to be the most significant for the
Group. The mitigating activities described below will help to reduce the likelihood or impact of each risk
occurring, although the Board recognises that it will not be possible to eliminate these risks entirely. The risks
listed do not necessarily comprise all those relating to the Group’s operations, or with an investment in the
Group.
If any of the following risks were to materialise, the Group's businesses, financial condition, results or future
operations could be materially adversely affected.
INDUSTRY SPECIFIC RISKS
Fluctuations in oil and gas prices
Short-term fluctuations in oil and gas prices may lead to uncertainty in the oil and gas industry which can lead
to reduced investment in equipment by the Group’s customers. In addition, a longer-term fall in oil and gas
prices could reduce levels of cash flow in the industry which could in turn lead to the reduction or deferral of
expenditure in the drilling sector.
The Board actively monitors key energy commodity prices and other industry parameters and if appropriate,
acts expeditiously to manage costs and working capital as necessary.
The price of oil both during the year under review and up until the date of this report has remained above
previous year’s levels which has resulted in a reduced concern regarding this particular area of risk.
Summary: The risk has reduced both in the year to 31 March 2023 and up to the date of the signing of these
accounts.
Geopolitical risks in Central Europe
Following the Russian invasion of Ukraine, the Board decided to cease trading with any Russian company or
sell to any other company that may deploy Enteq’s equipment in Russia.
Summary: As the level of revenue derived from Russia was insignificant there has been no major financial
impact on Enteq’s business.
Economic fluctuations in territories where the Group’s products are used
Economic fluctuations in territories where the Group’s products are used create uncertainty and discourage
investment. The Group’s products are used by service companies, which may deploy its equipment and services
in territories outside their national markets. Fluctuations in such territories could reduce the market size for the
Group’s products.
As mentioned above, recent oil price stability combined with the steady increase in the number of North
American rigs actively drilling has given the Board a level of assurance that this risk has reduced from this
time last year.
Management and the Board, using their experience and judgment, monitor political and economic
developments as appropriate in order to minimise, where possible, the impact of such adverse events on the
Group. Further, the Group’s strategy of diversifying its customers, product lines and geographic markets helps
to mitigate these risks.
Summary: The risk relating to the North American and international markets has reduced both in the year to
31 March 2023 and up to the date of the signing of these accounts.
12
RISKS RELATING TO THE GROUP'S STRATEGY
Acquisition opportunities
The Board continues to adopt a cautious approach to acquisition opportunities. The Board continues to monitor
and assess potential earning enhancing acquisitions.
Summary: No change in risk.
GROUP SPECIFIC RISKS
Relevance of product offering
The Board acknowledges that the group constantly needs to review the current line of products so that it offers
what the market demands. Failure to create new high-quality products to meet customer needs, or failure to
adequately protect intellectual property, will result in a loss of market share and associated reduced financial
performance.
There is a clear product development strategy combined with regular reviews of the current engineer projects.
Intellectual property is protected through obtaining the appropriate patents.
Summary: The risk has been reduced due to the continuing development of the SABER product where the
market demand conditions are expected to be more attractive than the MWD sector.
Dependence on key personnel
The future success of the Group is substantially dependent on the continued services and continuing
contributions of its Directors and key employees. The loss of the services of any of its Directors or other key
employees could have a material adverse effect on the Group.
The Board believes dependence on key personnel is an acceptable risk. However, the Board periodically
reviews the capability and availability of the necessary skills to manage the Group and will seek suitable
replacements or additions where appropriate.
The Board continues to balance this risk with the requirement to keep overhead spend constantly under review.
Summary: Due to the actions taken during the year this risk remains manageble.
Dependence on key customers
The Group has been dependent on a relatively small number of key customers, however with the introduction
of SABER, this is expected to broaden the potential customer base.
Summary: Due to the actions taken during the year there, has been a reduction in this risk.
Cash balances
A number of actions were taken during and after the financial year to increase the cash balances. The level of
the Group’s cash balance gives the Board comfort as to the future viability of the Group. The majority of cash
is held in deposit accounts in USD.
Summary: Due to the actions taken, there has been no change in this risk.
NON-SPECIFIC RISK FACTORS
Health, Safety & Environment
Safety is one of our core priorities. The Group is subject to a number of Health, Safety & Environment (“HSE”)
laws and regulations that affect its operations, facilities and products in each of the jurisdictions in which it
operates. The Group is committed to operating in compliance with all HSE laws and regulations relating to its
products, operations and business activities. However, there is a risk that it may have to incur unforeseen
expenditures to cover HSE liabilities, to maintain compliance with current or future HSE laws and regulations
or to undertake any necessary remedy.
The Board closely monitors safety reporting and HSE compliance both at each monthly meeting and during
visits to the Group’s businesses. The Group has the appropriate insurance policies in place to cover any actions
brought against it related to breaches in health and safety.
Summary: Due to the continuing focus on HSE compliance there has been no change in this risk.
13
Infringement upon intellectual property rights
Patents and/or Know-How owned by the Group may be challenged by third parties and may not be enforceable
in certain parts of the world. In addition, agreements concerning intellectual property rights entered into by the
Group could be terminated and may have an adverse effect upon the Group’s business.
Where appropriate the Group protects the validity of its intellectual property via thorough patent and trademark
applications and will robustly defend any claims against it, if appropriate.
Summary: Due to no notification of patent infringements plus continued patent applications there has been no
change in this risk.
Business Interruption
Business interruption may occur as a result of a number of events, which are either within or outside the
Group’s control. These include: the failure or unavailability of operational and IT infrastructure; delay or
interruptions in the availability of products or services provided by third-party suppliers and natural disasters
such as earthquake, flooding and storms.
Mitigation is achieved by having a business continuity plan, relevant insurances and managing dependence on
key supplier relationships.
Summary: No change in this risk.
Threats to Cyber security
A compromise of the Group’s IT systems could cause significant disruption in production, shipments and cash
collection and lead to financial, intellectual property or commercially sensitive data losses.
The Group is mindful of the risk of cyber-attacks and breaches of cyber security. The company maintains
appropriate controls (such as IT system password protection, managing user access and privileges, malware
protection and network security) and compliance with relevant data protection regulations. The Board
commissioned an independent IT security review during the year to March 2021. The review found no major
security issues requiring management action.
Summary: Due to actions taken following the cyber security review undertaken during the previous year this
risk has reduced.
The Strategic Report set out on pages 5 to 8 was approved by the Board of Directors on 29 September 2023
and signed on its behalf by:
Andrew Law
Chief Executive Officer
29 September 2023
14
Environmental, Social and Governance report to 31 March 2023
Enteq is committed to developing relationships with its key stakeholders – employees, shareholders, customers,
suppliers and communities within the areas we operate. This report describes the policies and responsibilities
which Enteq has adopted to ensure that it is and remains a responsible global corporate citizen.
Enteq’s commitment to shareholders, employees and other key stakeholders is to create a sustainable
organisation, capable of delivering long-term positive returns and providing stability to all employees.
The Group has implemented key policies in respect of:
• Anti-bribery and Corruption
• Embargo compliance
• Data protection and privacy
• Corporate ethics & standards code of conduct, including employee ‘speak up’ policy
In addition, the Group has implemented procedures to ensure that it:
communicates appropriately with shareholders and employees;
•
• meets all health, safety and environmental legislative requirements; and
• meets the highest standards of business ethics in all its dealings, including strict compliance with both
UK and US legislation introduced to prevent bribery
Investor Communications
Communicating with the Company’s shareholders is of key importance to the Directors. The Board do so
through press releases, issued via the London Stock Exchange and institutional investor presentations. The
Chief Executive and Finance Director meet with major shareholders at least twice a year, following the
announcement of the Group’s half and full year results.
Employees
Enteq continues to recognise that employees are the most valuable asset in the Group. Both senior and local
management have ensured that all staff are kept informed of the changes to trading patterns and fully explained
the reasons behind the actions taken during the year. As at 31 March 2023, the Group had 13 employees
(2022:16).
The Group continually looks to improve its structures to ensure that all aspects relating to employment, training,
career development and promotion of disabled persons are appropriate to the environment in which all
employees work and fully comply with all relevant laws and regulations.
Health and Safety
The Group is committed to achieving and maintaining the highest standards of safety for its employees,
customers, suppliers and the public. Enteq aims for best practice and employs rigorous health and safety
practices.
Health and Safety policies include:
• Regular audit and maintenance reviews of facilities, equipment, practices and procedures to ensure
compliance with prevailing standards and legislation and a safe environment for all those who work
within and around our facilities.
• Seeking accreditation and alignment with internationally recognised Quality Assurance standards.
• Monitoring and reporting to each Board meeting.
• Appropriate training and education of all staff.
15
The Group’s target is to achieve zero recordable incidents. Each local business is required to develop tailored
policies to reflect its daily business. These incorporate the Group’s approach to putting safety first and, at a
minimum, to comply with local regulatory requirements.
During the year, there were no fatalities across the Group’s operations with no reportable incidents (2022:
none).
Environment
The Group is committed to the protection of the environment and developing manufacturing processes and
procedures which ensure that any adverse effects on the environment are kept to a practicable minimum. The
Board takes the view that sustainable development is in the interests of all our stakeholders and include
environmental issues in all planning and decision-making.
The Group’s environmental policy is to look for opportunities and adopt practices that create a safer and cleaner
environment. The Board are particularly sensitive to the challenges for the industry in which the Group
operates.
Key aspects of the Group’s environmental policies include:
• Keeping any adverse effects on the environment to a practicable minimum.
• Encouraging the reduction of waste and e
•
• Encouraging employees to pay special regard to environmental issues and requirements in the
s and promoting awareness of recycled materials and use of renewable resources.
communities in which the Group operates.
Incorporating health, safety and environment considerations into the design of new facilities.
•
The Company is not a large company and thus no SECR (Streamlined Energy and Carbon Reporting)
disclosures are required.
Business Ethics
The Group’s Directors and employees promote the highest standards of honesty and integrity in the way it goes
about its business, recognising that the Group’s reputation is of critical importance in the industry in which we
operate.
Through the Group’s Code of Conduct and compliance with the UK Bribery Act and the US Foreign and
Corrupt Practices Act, the Group has policies and controls in place detailing procedures on how the Group
interacts with customers, suppliers and governments around the world. These include a Global Gift and
Entertainment Guideline which codifies the standards and conduct which we set for our employees’
interactions with customers, suppliers and other external parties.
Mark Ritchie
Company Secretary
29 September 2023
16
Report of the Directors
For the year to 31 March 2023
The directors present their report with the financial statements of the Group and the Company for the year
to 31 March 2023.
DIRECTORS
The directors holding office at the year-end are as follows:
Andrew Law
Andrew Law (48), has a background in oilfield services through Field Engineering at Schlumberger and
General Management within Weatherford. Andrew has worked in corporate finance at KPMG and is a Sloan
Fellow from London Business School.
Chief Executive Officer
Chief Finance Officer (appointed 16th June 2023)
Mark Ritchie
Mark Ritchie (44) is an associate member of the Chartered Institute of Management Accountants and has
over 20 years’ financial experience, ten years of which have been spent in Board level roles in private equity
backed businesses. He most recently held the role of Finance and Support Services Director in PE backed
construction business and prior to that was Group Finance and IT Director of a PE backed oil and gas services
business.
Chief Finance Officer (resigned 16th June 2023)
David Steel
David Steel (63), is a Chartered Accountant who qualified in KPMG’s London office. David has held senior
finance positions in a wide variety of industries including international trade exhibitions and aerospace
manufacturing. Prior to joining Enteq he was Deputy Finance Director of a global provider of geoprediction
tools to the Technologies oil and gas industry.
Non-Executive Chairman
Martin Perry
Martin Perry (61), formerly CEO of Sondex. Martin entered the oil industry in 1984, initially as a field
engineer after gaining an engineering degree at Exeter University. Martin then worked in the IT and Data
Communications industry, before leading the Management Buy Out at Sondex. Following the acquisition of
Sondex by GE in 2007, Martin was appointed CEO of GE’s Oilfield Technologies Division and subsequently
served as Non-Executive Chairman of 3 private equity-backed businesses.
Non-Executive Director
Iain Paterson
Iain Paterson (76), formerly Chairman of Sondex and HYVE Group plc, Non-Executive Director of Hunting
plc, Paladin Resources, MOL NyRt and of the Advisory Board of the Oman Oil Company, Iain has over 45
years’ experience in the oil industry. He held senior management positions at BP and was a main Board
director of Enterprise Oil plc. Iain also chairs the Company's Nomination Committee.
Neil Hartley
Neil Hartley (57), currently with Buckthorn Partners LLP, a global private equity investment firm
exclusively focused on energy transition. He has held senior positions with McKinsey & Company and
Simmons & Company International. Neil chairs both the Company's Audit and Remuneration Committees.
Non-Executive Director
There is no requirement to re-appoint any of the directors until the AGM to be held in September 2023.
Dividends
No dividends will be distributed for the year ended 31 March 2023 (year ended 31 March 2022: nil).
Post Balance Sheet Events
On 11 April 2023 the Company sold various assets relating to the MWD division. Full details are given in
Note 28.
Research and Development
The Company maintains its commitment to research and development through the activities undertaken by
the Engineering team, based both in the South Houston and locations in the United Kingdom.
17
Risks and uncertainties
A review of the key risks and uncertainties affecting the Group is set out on pages 12 to 14. The Group’s
exposure to key financial risks is set out in note 26 to the financial statements, see page 64.
Directors’ and Officers’ Liability Insurance
The Company maintains insurance against certain liabilities, which could arise from a negligent act or a
breach of duty by its Directors and Officers in the discharge of their duties. This is a qualifying third-party
indemnity provision, which was in force throughout the financial year.
Future developments
A key future development will be a focus on the introduction of innovative technologies into the market
place, primarily the SABER rotary steerable tool, as referenced in the strategic review.
Annual General Meeting
The Annual General Meeting of the Company will take place on 29 September, 2023 at 1 Bartholomew
Close, London, EC1A 7BL commencing at 11am. At the meeting, as well as routine matters, members will
be asked to receive the Report of the Directors and Accounts and to approve the auditors and their
remuneration. Further details of the resolutions are set out in the letter concerning the Annual General
Meeting, which accompanies the Notice of the Annual General Meeting.
Powers of the Directors
Subject to the Company’s Articles of Association, UK legislation and any directions prescribed by resolution
of the Company in general meeting, the business of the Company is managed by the Board. The Directors
have been authorised to allot and issue Ordinary shares and to make market purchases of the Company’s
Ordinary shares. These powers are exercised under authority of resolutions of the Company as adopted at
incorporation.
Share Capital
The Company’s issued share capital comprises Ordinary shares of 1p each.As at 31 March 2023, there were
69,724,006 Ordinary shares. The movements in share capital during the year are set out in note 17.
Voting Rights and Restrictions on Transfer of Shares
On a show of hands at a general meeting of the Company, every holder of Ordinary shares present in person
or by proxy, and entitled to vote, has one vote, and, on a poll, every member present in person or by proxy
and entitled to vote has one vote for every Ordinary share held. The holders of the Incentive shares have no
rights to vote or receive dividends. Further details regarding voting at the Annual General Meeting can be
found in the notes to the Notice of the Annual General Meeting. None of the Ordinary shares carry any
special rights with regard to control of the Company. Proxy appointments and voting instructions must be
received by the Company’s Registrars not later than 48 hours before a general meeting.
A shareholder can lose his entitlement to vote at a general meeting where that shareholder has been served
with a disclosure notice and has failed to provide the Company with information concerning interests in
those shares. Shareholder’s rights to transfer shares are subject to the Company’s Articles of Association.
Registrar
The address and contact details of Computershare, the Company’s Registrar, are listed at the front of this
report. Computershare is the Company’s single alternative inspection location, whereby individuals can
inspect the register of members. Individual shareholders may view their personal shareholder information
online, through the www.computershare.co.uk website.
Articles of Association
The Company’s Articles of Association may only be amended by special resolution at a general meeting of
shareholders. Where class rights are varied, such amendments must be approved by the members of each
class of share separately.
18
Statement of Directors’ Responsibilities
The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law
the directors have prepared the Group financial statements in accordance with UK adopted international
accounting standards in conformity with the requirements of the Companies Act 2006’ and have elected to
prepare the parent Company financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice including Financial Reporting Standard 101 – 'The Reduced Disclosure Framework'
(FRS 101) and applicable laws including the Companies Act 2006. Under Company law the directors must
not approve the financial statements unless they are satisfied that they give a true and fair view of the state
of affairs of the Company and the Group and of the profit or loss of the Company and Group for that period.
In preparing these financial statements, the directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- state whether applicable IFRS/UK Accounting Standards have been followed, subject to any material
departures disclosed and explained in the financial statements; and
- prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company's transactions and disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
Statement as to Disclosure of Information to Auditors
The Directors confirm that, in so far as each of the directors is aware, there is no relevant audit information
of which the Company’s auditors are unaware, and each Director has taken all the steps that he ought to have
taken as a Director in order to make himself aware of any relevant audit information and to establish that the
Company’s auditors are aware of that information.
The directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
Going Concern
At 31 March 2023 the Group has cash balances of $5.4m ($4.8m year ended 31st March 2022) and no debt.
Accordingly, the Directors have a reasonable expectation that the Group has adequate resources to continue
in operational existence for the foreseeable future and consequently have adopted the going concern basis of
accounting in preparing these financial statements. Further information on the way the going concern review
was conducted is set out in note 4 in the notes to the financial statements which can be found on page 38.
Auditors
During the year BDO LLP resigned as auditors with Gravita Audit Ltd. appointed in their place. Gravita
will be proposed for reappointment at the forthcoming Annual General Meeting in accordance with Section
489(4) of the Companies Act 2006.
Signed on behalf of the Board,
Mark Ritchie
Company Secretary
29 September 2023
19
Remuneration Committee Report
For the year to 31 March 2023
Introduction
The Company is AIM-listed and therefore is not legally required to set out its remuneration policy but it is doing so on a
voluntary basis. To the extent that such principles are relevant to the current circumstances of the Company, the provisions
of inter alia the Directors' Remuneration Report Regulations 2008 and the Quoted Company Alliance Code are taken into
account. As required by AIM Rule 19, the Company has disclosed the remuneration received by its directors during the
financial period.
Remuneration Committee
The Remuneration Committee is responsible for determining the remuneration of both the chairman and executive directors.
This includes setting competitive salaries, annual performance targets and participation in the Company’s executive share-
based incentive plans. The Committee also takes account of the remuneration policy for the Group’s senior managers.
Remuneration policy
The Company's remuneration policy aims to encourage a performance-based culture, attract and retain high calibre executive
directors and align executive directors' and shareholders' interests. In determining such policy, the Remuneration Committee
takes into account all factors which it deems necessary, including the Company's wider pay structures. The objective of the
policy is to ensure that executive management are provided with appropriate incentives to encourage enhanced long-term
performance and are, in a fair and responsible manner, rewarded for their individual contributions to the success of the
Company.
The remuneration policy of the Company has a number of principal components:
Salary and benefits
Basic salaries are determined by the Remuneration Committee bearing in mind the salaries paid in AIM-listed and other
same-sector companies. Executive directors also receive taxable benefits including life insurance policies and healthcare.
The Remuneration Committee has considered the requirements of the UK Corporate Governance Code (April 2018) to set
an upper limit for executive pay levels. However, the committee also recognises the need to attract and incentivise
management and therefore does not believe it is appropriate to set such limits at this stage of the Group's development,
although the appropriateness of all incentive packages are considered by the Committee. Any bonus will be subject to
Remuneration Committee approval. The Remuneration Committee will continue to monitor this policy.
Annual Bonus Plan
The annual grant of bonuses is conditional upon the achievement of targets by reference to agreed financial performance
measures. The scheme is applicable to all executive directors. For the financial year ended 31 March 2023, the targets related
to the group achieving the following targets: an underlying adjusted EBITDA at least equal to the Board approved budget; a
breakeven level of basic eps (calculated by dividing the loss attributable to ordinary shareholders for the year by the weighted
average number of ordinary shares in issue during the year); a specific year-end cash balance; acquiring a certain number of
new customers and the launch of new technologies. As not all of the financial targets were achieved the Remuneration
Committee decided to pay only a proportion of the full amount provided under the scheme.
Long-term Incentive and Share Option plans
The Company believes that employee share ownership strengthens the link between their personal interests and those of the
shareholders. Consequently, the Company has put in place a Share Option Plan. All Group employees participate in the Plan,
except for members of the Board and two senior executives. Only the current executive directors are incentivised via the
PSP scheme (see below). Since the change of his role from Chief Executive Officer to non-executive chairman, which came
into effort on 1 April 2021, Martin Perry retains the right to benefit from any PSP awards made during his time as an executive
director.
On 17 September 2014, the Company introduced a Performance Share Plan (“PSP”) for the Executive Directors and other
key senior executives. The Remuneration Committee were given the power to grant awards at the nominal value of the shares,
but the exercise of which is subject to certain performance conditions. Such awards will lapse if not exercised within 10
years of grant. The participants in this Plan are no longer eligible for awards under the Share Option Plan or other Long-
term Incentive Plan. The details of the grants awarded under all incentive plans, to date, are shown in note 19.
20
Directors' service contracts
All executive directors are employed under service contracts. The services of all executive directors may be terminated by
the provision of a maximum of 6 months' notice by the Company and the individual. Services of Non-Executive directors
may be terminated by the provision of a maximum of 3 months' notice by the Company and the individual.
Directors’ remuneration
The annual remuneration rates of the directors in office during the year ended 31 March 2023 were as follows (all salaries
denominated in £ Sterling have been converted to US dollars):
Annual
Remuneration
31 March 2023
Annual
Remuneration
31 March 2022
$ 000’s
$ 000’s
327
269
596
56
56
56
168
764
329
319
648
243
54
54
351
999
31 March 2023
31 March 2022
Andrew Law
David Steel
Total - Executive
Martin Perry
Iain Paterson
Neil Hartley
Total – Non executive
Total 2
2 Includes the following:
Martin Perry
Pension contribution
Gains on LTIPs exercised
Andrew Law
David Steel
Pension contribution
Gains on LTIPs exercised
Pension contribution
Gains on LTIPs exercised
-
-
18
-
15
-
-
58
18
-
24
30
In order to maximise the Group’s cash balance, from 1st February 2015, elements of the Board’s remuneration were settled
in shares rather than cash. Included in the annual remuneration figures set out in the above table are the following elements
settled in shares:
31 March 2023
$ 000’s
31 March 2022
$ 000’s
Andrew Law
David Steel
Total - Executive
Martin Perry
Iain Paterson
Neil Hartley
Total – Non executive
Total
200
121
321
35
25
25
85
406
91
105
196
101
14
14
129
325
21
No shares were issued during the year (2022: $146k).
Interests in
PSP options
Martin Perry
Andrew Law
David Steel
Martin Perry
Andrew Law
Andrew Law
David Steel
Andrew Law
David Steel
Andrew Law
David Steel
Total
Number of PSP Options
at 31/3/23
Number of PSP Options
at 31/3/22
Vesting dates
-
-
-
959,259
356,296
500,000
493,333
633,803
522,254
775,862
639,310
495,629
184,091
254,895
959,259
356,296
500,000
493,333
633,803
522,254
-
-
June 2022
June 2022
June 2022
June 2023
June 2023
April 2023
June 2023
June 2024
June 2024
June 2025
June 2025
4,880,117
4,399,560
The performance conditions for each of the PSP awards are as follows:
Vesting Date:
June 2023
June 2023
June 2024
June 2025
Proportion awarded for compound annual growth rate in Total Shareholder Return (“TSR”)1 of:
30% or greater
10%
Less than 10%
adjusted
for
Maximum of range achieved
Minimum of range achieved
awarded
Proportion
EBITDA:
Weighting:
Start point:
TSR (share price) growth
Adjusted EBITDA
100%
33%
0%
100%
33%
50%
50%
100%
33%
0%
100%
33%
50%
50%
100%
33%
0%
100%
33%
50%
50%
100%
33%
0%
100%
33%
50%
50%
TSR (share price) growth
Adjusted EBITDA range 2
13.5p
$1.6m to $2.2m
17.2p
$3.1m to $4.3m
14.5p
$13.3m to $9.8m $67.7m to $49.6m
17.8p
The total amount to be expensed over the vesting period of all the above options is determined by reference to the fair value
at the date of granting and the number of awards that are expected to vest.
1 The TSR is defined as the difference between the share price on the date of the award (plus the sum of all dividends paid by the Company on one ordinary
share during the three-year measurement period) and the share price on the measurement date.
2 For the three years starting 1 April in the year the awards are granted.
There were no gains made on the exercise of the options made during the year to 31 March 2023 (31 March 2022: $88k).
Interests in warrants
There were no interests held by directors or persons connected to the directors in warrants over shares in Enteq Technologies
Plc at 31 March 2023 (2022: none).
Highest paid director
The Companies Act 2006 requires certain disclosures about remuneration of the highest paid director taking into account
emoluments, gains in exercise of share options and amounts receivable under long-term incentive schemes. Details of this
remuneration are set out above.
Directors and their interests in ordinary shares
The Directors of the Company held the following interest in the ordinary shares of Enteq Technologies Plc:
22
Name
Andrew Law
David Steel
Iain Paterson
Martin Perry
Neil Hartley
% 31st
March
2023
2.38
3.50
0.86
6.59
0.12
Number 31-
March-2023
Number 31-
March-2022
1,660,512
1,077,403
2,438,745
2,149,756
600,241
572,460
4,596,600
4,568,810
88,549
59,770
Substantial shareholding
The Company is aware that the following had an interest of 3% or more in the issued ordinary share capital of the Company:
Rank
1
2
3
4
5
6
7
8
9
Shareholder
Premier Miton Investors
Directors
Canaccord Genuity Wealth
Management (Inst)
Allianz Global Investors
Killik, stockbrokers
Parkinson Family
Individuals
Columbia Threadneedle
Investments
Interactive Investor (EO)
10
Hark Private Trust
Number of
shares as at
31 March
2023
11,798,766
9,380,647
8,800,000
6,150,000
2,634,824
2,220,000
2,151,076
2,008,642
1,896,950
1,838,886
% at 31-
Mar-2023
16.92
Number of
shares as at
30 June 2023
11,798,766
13.45
10,270,780
12.62
8.82
3.78
3.18
3.09
2.88
2.72
2.64
8,800,000
6,150,000
2,634,824
2,220,000
2,001,076
2,008,642
1,976,266
1,838,886
% at 30-
Jun-2023
16.71
14.54
12.46
8.71
3.73
3.14
2.83
2.84
2.80
2.60
Neil Hartley
Chairman of the Remuneration Committee
29 September 2023
23
Corporate Governance Report to 31 March 2023
This report for shareholders sets out Enteq Technologies Plc’s approach to Corporate Governance. We have reported
on our Corporate Governance arrangements by drawing upon best practice available, including those aspects of the
the Company. See our website
Quoted Companies Alliance we
https://www.enteq.com/investors/corporate-governance/ for all the required disclosures regarding the company’s
governance arrangements.
consider
relevant
to be
to
Board Composition
The Board of Enteq Technologies plc is responsible for determining strategic direction and reviewing management and
operational performance. Operational performance is delegated to the Executive Directors, who meet regularly to review
the performance of and prospects for the business. The current composition of the Board is set out below.
Board
Audit
committee
Remuneration
committee
Nomination
committee
Andrew Law
Chief Executive Officer
Member
Mark Ritchie
Chief Financial Officer
Member
-
-
-
-
-
-
Martin Perry
Non-Executive Chairman Chairman Member
Member
Member
Iain Paterson
Non-Executive Director
Member
Member
Member
Chairman
Neil Hartley
Non-Executive Director
Member
Chairman
Chairman
Member
Mark Ritchie also acts as the Company Secretary and, therefore, this role is not independent of the Board.
In the year under review the Board formally met on 10 scheduled occasions. All the directors attended every meeting.
The division of responsibilities between Martin Perry, Chairman, and Andrew Law, CEO, has been clearly established
by way of written role statements, which have been prepared by the Board. The Chairman's main responsibilities are to
lead the Board, liaising as necessary with the CEO on developments between meetings of the Board, and to ensure the
CEO and his executive management team have appropriate objectives and that their performances against those
objectives are reviewed. The CEO is responsible to the Board for the executive management of the Group and for
liaising with the Chairman and keeping him informed on all matters.
Board Evaluation
Between the year end and the date of signing these accounts a Board evaluation was carried out by both the Non-
Executive and Executive Directors. The Board was regarded as effective and possessed sufficient skills and experience
to enable it to discharge its responsibilities appropriately. The evaluation further confirms the Board’s belief that the
Board balance and the composition of each main Board Committee is appropriate. In reviewing the Board, it was
concluded that the skills and experience the Executive Directors bring to the Board are complementary to each other
and those of the Non-Executive Directors.
Board Committees
The Board has three main committees to which it delegates responsibility and authority.
Audit Committee
The Audit Committee comprises solely of Non-Executive Directors of the Company. The Board considers that the
Audit Committee members have the skills necessary to fulfil their duties. In addition, financial advice is available
externally as and when they require it. The committee has met three times during the year under review.
The full text of the responsibilities of the audit committee can be found at https://www.enteq.com/investors/corporate-
governance/
External audit
24
The external auditors’ full year report includes a statement on their independence, their ability to remain objective and
to undertake an effective audit. The committee considers and assesses this independence statement on behalf of the
Board taking into account the level of fees paid particularly for non-audit services. The committee considers the
effectiveness of the audit by reviewing and taking account of Financial Reporting Council reports on the auditors; input
from executive management; consideration of responses to questions from the audit committee and the audit findings
reported to the committee.
The committee closely monitors fees paid to the auditors in respect of non-audit services, which are analysed within
note 8 on page 51. In 2023, there were audit fees of $74k with no non-audit services provided. The scope and extent of
non-audit work undertaken by the external auditor is monitored by, and, above certain thresholds, requires prior approval
from the committee to ensure that the provision of such services does not impair their independence or objectivity.
Internal audit
To date, the Board has not considered it necessary or cost effective to employ a separate internal audit team. The senior
finance team carries out reviews on an on-going basis. These reviews are available to the Committee and encompass
the identification of the key business, financial, compliance and operational risks facing each operating location,
together with an assessment of the controls in place for managing and mitigating these risks. The Committee will
continue to monitor the need for a separate internal audit function.
Remuneration Committee
The Remuneration Committee comprises solely of Non-Executive Directors of the Company and is responsible for
reviewing remuneration arrangements for the Board and other senior employees of the Group and for providing general
guidance on aspects of remuneration policy for the Group. The Committee met once during the year under review.
Nomination Committee
The Nomination Committee is responsible for reviewing and recommending executive and Non-Executive Board
appointments for the Group. There was no requirement for the Committee to meet during the year under review.
In accordance with the Corporate Governance Code's guidance for non-FTSE 350 companies on the re-election of
directors and the articles of association of the Company, all Directors are subject to re-election at the first annual general
meeting after their appointment, and to re-election thereafter on a triennial basis.
25
Internal Controls
The Board acknowledges its responsibility for the Group’s system of internal control, for reviewing its effectiveness
and for compliance with relevant legislation. The internal control system, which has been in place throughout the year
under review, is structured to allow the Board to identify, evaluate and manage the significant risks to which the Group
is exposed. The system comprises the following elements:
• Management Structure – within operational parameters set by the Board, management is delegated to the Executive
Directors. The Executive Directors meet and communicate regularly with the Board to ensure a thorough and
consistent flow of information about the business.
• Reporting and Consolidation – the Group receives detailed financial information from subsidiaries, which take the
form of monthly management accounts, annual budgets and forecast projections. The Group also monitors and
reviews new UK Listing Rules, Disclosure and Transparency Rules, accounting standards, interpretations and
amendments and legislation and other statutory requirements. Subsidiary reporting entities are supported by
instruction from the Group. Data is subject to review and assessment by management through the monitoring of
key performance ratios and comparison to targets and budgets. The content and format of reporting is kept under
review and periodically amended to ensure appropriate information is available.
• Strategic Planning and Budgeting – strategic plans and budgets containing comprehensive financial projections are
formally presented to the Board for consideration and form the basis for monitoring performance.
• Legislative Compliance and Codes of Conduct – the Group has and is implementing procedures to ensure it meets
its legislative and other responsibilities. The Group has implemented formal procedures including the publication
of bribery and corruption policies and guidelines on interacting with customers, suppliers and agents, as well as
policies for gifts, entertainment and hospitality.
The Directors recognise the value and importance of maintaining the highest standards of corporate governance. To
this effect, on 10 July 2018, the Board agreed that the Quoted Companies Alliance’s (“QCA”) code of corporate
governance was the most appropriate for Enteq Technologies Plc to follow, and so, was formally adopted. The main
principles of the QCA Code and how Enteq ensures that it is fully compliant with these principles are set out below:
• Establish a strategy and business model which promote long-term value for shareholders;
o Enteq has an established strategy and business model supplying the global Oil & Gas directional drilling market
with high-end, differentiated, robust Measurement While Drilling equipment and associated parts and
components. Both the strategy and business model are subject to Board review on at least an annual basis to
ensure that they provide the most appropriate way to provide long-term value for shareholders.
o Compliance during year: Reviewed during the Strategy Day held in September 2022.
• Seek to understand and meet shareholder needs and expectations;
o The Executive Directors offer to meet the major shareholders after the announcement of both the year end and
interim results. As well as presenting an explanation of these results, these meetings give the shareholders an
opportunity to inform the Directors of both their needs and expectations. The AGM is an opportunity for all
shareholders to present their views to the whole Board. The Chairman is also available to meet shareholders
at any time.
o Compliance during year: Extensive shareholder meetings held post Interim and Year End results.
• Consider wider stakeholder and social responsibilities and their implications for long-term success;
o Regular meetings are held with the staff to ensure that the strategic vision of the company is clearly presented.
o Meetings are held with other stakeholders as required.
o The manufacturing plant regularly re-assesses its impact on the environment and implements the appropriate
procedures minimise any adverse effects.
o Regular Health and Safety meetings are held with all staff to minimise the likelihood of any accidents and
“near misses”.
o Compliance during year: Post March 2022 year end briefings held with staff; Monthly health and safety
meetings held with reports noted at each Board meeting.
26
• Embed effective risk management, considering both opportunities and threats, throughout the organisation;
o The Board is responsible for the Group's risk management and undertakes a systematic review of the key risks
and uncertainties which face the Group. It seeks to embed risk management and to facilitate the implementation
of risk management measures throughout the Group’s businesses.
o A comprehensive risk register is maintained, which is regularly reviewed by the Board.
o Monthly reports relating to health and safety at work is presented to the Board.
o Compliance during year: Risk matrix reviewed by Board
• Maintain the board as a well-functioning, balanced team led by the chair;
o A “Board Effectiveness Review” is completed annually, with the results debated at the appropriate Board
meeting. This review includes an assessment of whether the Board has functioned in compliance with this
principle through assessing, inter alia, directors’ level of skills and experience, the Board’s performance,
review of company strategy, quantity and quality of board meetings.
o Compliance during year: Effectiveness review conducted in June 2023.
• Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities;
o
In addition to being part of the “Board Effectiveness Review” outlined above, attendance at appropriate
external training courses and seminars is encouraged.
o Compliance during year: No training courses and seminars were attended.
• Evaluate board performance based on clear and relevant objectives, seeking continuous improvement;
o A Board Effectiveness Review is carried out annually and is a rigorous process.
o Compliance during year: Effectiveness review conducted in June 2023.
• Promote a corporate culture that is based on ethical values and behaviours;
o There are formalised policies covering areas such as anti-bribery and corruption, embargo compliance.
o There is a company-wide “speak up” policy covering breaches or potential breaches of our business principles,
unlawful conduct, financial malpractice or dangers to the public and the environment.
o The importance of ethical value and behaviours is included in the regular staff meetings mentioned above.
o Compliance during year: Reiterated during staff briefings.
• Maintain governance structures and processes that are fit for purpose and support good decision-making by the
board; and
o
In addition to the Board, that comprise two executive and three non-executive directors, the following sub-
committees of the Board are in place, each having their own terms of reference and comprise solely of Non-
Executive Directors of the Company, except for the Nomination Committee which includes the Chief
Executive Officer:
§ Audit Committee whose main responsibilities are:
§ monitor and review reports from the Executive Directors, including the Group’s financial
statements and Stock Exchange announcements;
review reports from the Group’s external auditors;
§ monitor and review the Group’s systems of internal control;
§
§ monitor any corporate governance and accounting developments;
§ monitor the Group’s bribery act compliance procedures;
§
consider and recommend to the Board the reappointment of the external auditor;
§ Remuneration Committee whose main responsibilities are reviewing remuneration arrangements for
the Board and other senior employees of the Group and for providing general guidance on aspects of
remuneration policy for the Group
§ Nomination Committee whose main responsibilities are the reviewing and recommending executive
and Non-Executive Board appointments for the Group.
o Compliance during year: Appropriate meetings held by all committees during the year under review.
27
• Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and
other relevant stakeholders.
o The compliance with this principle has been addressed through regular meetings with investors and regular
staff and other stakeholder meetings as outlined above.
o Compliance during year: See above comments.
Mark Ritchie
Company Secretary
29 September 2023
28
Independent auditor’s Report
to the Members of Enteq Technologies Plc
Opinion
We have audited the financial statements of Enteq Technologies Plc (the “Parent Company”) and its subsidiaries (the Group”) for the
year ended 31 March 2023 which comprise of the consolidated statement of comprehensive income, the consolidated statement of
financial position, the consolidated statement of cash flows, the consolidated statement of changes in equity, the company statement of
financial position and the company statement of changes in equity and notes to the financial statements, including a summary of
significant accounting policies.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK
adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the Parent
Company financial statements is applicable law and United Kingdom Generally Accepted Accounting Practice.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31
March 2023 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with UK adopted international accounting
standards;
the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice; and
the Group and Parent Company financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements
section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group and the Parent
Company’s ability to continue to adopt the going concern basis of accounting included reviews of expected cash flows for a
period of 12 months, to determine expected cash outflow, which was compared to the liquid assets held in the Group.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group and the Parent Company’s ability to continue as a going
concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified
by our audit.
29
Key audit matter
Intangible assets
How our audit addressed the key audit matter
We have performed the following audit procedures:
The carrying value of the Group’s intellectual property assets, at
cost, as at 31 March 2023 amounted to $6,484,000 (2022:
$4,413,000). The additions during the year were $£2,639,000
(2021: $2,614,000).
• considered whether the nature of the costs met the
necessary criteria under IAS 38 for the costs to be allowed
for capitalisation;
The amortisation during the year relates to Fusion which has been
fully amortised as at year end. The cost of the remaining intangible
assets relate to Saber and amortisation will start once the assets are
available for use.
The risk is that the costs may not qualify for capitalisation or
technological advancements may render the market value of the
capitalised costs below its carrying value.
The Directors have assessed whether the costs meet the criteria for
capitalisation and whether there are any indicators of impairment.
The balance sheet capitalisation cost is $6.5m as at 31st March
2023. The board performed an impairment review as at year end,
which comprised of a discounted cashflow model of future
cashflows from this asset. The basis of the valuation supports the
Board judgement that no impairment of SABER is necessary.
• vouched a sample of the addition capitalised to invoices,
to confirm that they are correct capital item and have been
accurately recorded;
• considered whether the Directors’ policy for the treatment
of such costs was reasonable and assessed whether the
costs included in the reconciliation were in line with the
Directors’ policy;
•
reviewed the cashflow model provided by management
supporting no impairment is needed, together with the
board paper supporting the various assumptions used in
the model such as anticipated market size, industry
market reports and expected revenue generated from
Saber.
Based on the audit work performed we are satisfied, that
although there are inherent uncertainties associated with the
forecast and estimation of useful economic life of intangible
assets, the directors have made reasonable assumptions about
the valuation and useful economic life of intangible assets,
based on past experience and expected future revenues. We
are also satisfied that all necessary disclosures have been made
in the financial statements.
Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.
Based on our professional judgment, we determined materiality for the financial statements as a whole as follows:
Group Financial statements
$ 130,000
Overall materiality
How we determined it Based on 1% of gross asset
Rationale for
benchmark applied
The objective of the Group is the
development of the SABER technology
following the disposal of its old MWD
IP and we believe the primary measure
of shareholders in accessing the
performance of the business is gross
asset.
Company Financial Statements
$ 70,000
Based on 1% of net asset
The company does not a business
operation and is rather in the
development of
the SABER
technology. Hence, it will be
more appropriate to use the net
asset as a basis of materiality
since shareholder will be more
concern of the value of the
Company.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit for the Group above
$6,500 and for the Company above $3,500 as well as misstatements below those amounts that, in our view, warranted reporting for
qualitative reasons.
30
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
In particular, we looked at where the Directors made subjective judgments, for example in respect of significant accounting estimates
that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed
the risk of management override of internal controls, including evaluating whether there was evidence of bias by the Directors that
represented a risk of material misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements
as a whole, taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in
which they operate.
The Group financial statements are consolidation of the parent company and its subsidiary, Enteq Technologies USA. We conducted a
full scope audit for the Group and Enteq Technologies USA for the purpose of the consolidation.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the annual report,
other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the Directors’ report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
the strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not
identified material misstatements in the Strategic report nor the Directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you
if, in our opinion:
•
adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received
from branches not visited by us; or
•
the financial statements are not in agreement with the accounting records and returns; or
•
certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 24, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative
but to do so.
31
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole, are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud, is detailed below.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
The objectives of our audit, in respect to fraud are: to identify and assess the risks of material misstatement of the financial statements
due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatements due to fraud, through
designing and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified during the audit.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the
entity and management.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-
compliance with laws and regulations, was as follows:
•
the senior statutory auditor ensured the engagement team collectively had the appropriate competence, capabilities and skills
to identify or recognise non-compliance with applicable laws and regulations;
• we identified the laws and regulations applicable to the company through discussions with directors and other management,
and from our knowledge and experience of the entity's activities.
• we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements
or the operations of the company, including Companies Act 2006, taxation legislation, data protection, employment and health
and safety legislation.
• we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management
•
and reviewing legal expenditure; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances
of non-compliance throughout the audit.
We assessed the susceptibility of the Group and the Parent Company’s financial statements to material misstatement, including
obtaining an understanding of how fraud might occur, by:
• making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual,
suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
•
To address the risk of fraud through management bias and override of controls, we:
•
•
•
•
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias;
and
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but
were not limited to:
•
•
•
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance; and
enquiring of management as to actual and potential litigation and claims
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial
transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures
required to identify noncompliance with laws and regulations to enquiry of the directors and other management and the inspection of
regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate
concealment or collusion.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at: www.frc.org.uk/auditorsresponsibilities.
32
This description forms part of our auditor’s report.
Use of this report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Sachin Ramaiya (Senior Statutory Auditor)
For and on behalf of
Gravita Audit Ltd, Statutory Auditor
Finsgate
5-7 Cranwood Street
London EC1V 9EE
28 September 2023
33
Enteq Technologies Plc
Consolidated Statement of profit or loss and other comprehensive income
Year to 31
March 2023
Year to 31
March 2022
Notes
$ 000's
Total
$ 000's
Total
Continued Operations
Revenue
Cost of Sales
Gross Profit
Administrative expenses before amortisation
8
Foreign exchange (loss)/profit on operating activities 8
Total Administrative expenses
Operating loss
-
-
-
(1,680)
5
(1,675)
(1,675)
-
-
-
(1,530)
(40)
(1,570)
(1,570)
Finance income
7
37
16
Loss from continued operations
(1,638)
(1,554)
Tax expense
Loss from discontinued operations
9
24
280
(1,446)
-
767
Loss attributable to:
Total loss for the period
Earnings per share (in US cents) from continuing operations:
Basic
Diluted
Earnings per share (in US cents):
Basic
Diluted
(2,804)
(787)
(2.0)
(2.0)
(4.0)
(4.0)
(2.2)
(2.2)
(1.1)
(1.1)
The accounting policies and notes on pages 39 to 64 form part of these financial statements.
34
Enteq Technologies Plc
Consolidated Statement of Financial Position
As at 31
March 2023
As at 31
March 2022
Notes
$ 000's
$ 000's
Assets
Non-current
Intangible assets
Property, plant and equipment
Non-current assets
Current
Trade and other receivables
Inventories
Cash and cash equivalents
Bank deposits
Assets held for sale
Current assets
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Share based payment reserve
Retained earnings
Total equity
Liabilities
Current
Trade and other payables
Total liabilities
Total equity and liabilities
11
12
14
15
16
16
25
17
17
18
6,484
63
6,547
237
-
5,351
-
2,184
7,772
14,319
4,143
2,506
6,649
3,537
2,410
3,296
1,500
-
10,743
17,392
1,080
92,037
448
(80,489)
1,072
91,919
432
(77,894)
13,076
15,529
1,243
1,243
1,863
1,863
14,319
17,392
The financial statements were authorised for issue and approved by the Board of Directors on 29 September2023 and
were signed on its behalf by:
Mark Ritchie
Director
The accounting policies and notes on pages 39 to 64 form part of these financial statements.
35
Enteq Technologies Plc
Consolidated Statement of Changes in Equity
For year ended 31st March 2023
Called up
share
capital
$ 000's
Retained
earnings
$ 000's
Share
premium
$ 000's
Share
based
payment
reserve
$ 000's
Total
equity
$ 000's
As at 1 April 2022
1,072
(77,894)
91,919
432
15,529
Issue of share capital
Transfers between reserves
Share based payment charge
Transactions with owners
Loss for the year
Other comprehensive income for the year
Total comprehensive income
Total movement
8
-
-
8
-
-
-
8
-
209
-
209
(2,804)
-
(2,804)
(2,595)
118
-
-
118
-
-
-
-
(209)
225
16
126
-
225
351
-
-
-
(2,804)
-
(2,804)
118
16
(2,453)
As at 31 March 2023
1,080
(80,489)
92,037
448
13,076
As at 1 April 2021
1,056
(77,324)
91,789
455
15,976
Issue of share capital
Transfers between reserves
Share based payment charge
Transactions with owners
Loss for the year
Other comprehensive income for the year
Total comprehensive income
Total movement
16
-
-
16
-
-
-
16
-
217
-
217
(787)
-
(787)
(570)
130
-
-
130
-
-
-
-
(217)
194
(23)
-
-
-
146
-
194
340
(787)
-
(787)
130
(23)
(447)
As at 31 March 2022
1,072
(77,894)
91,919
432
15,529
The accounting policies and notes on pages 39 to 64 form part of these financial statements.
36
Enteq Technologies Plc
Consolidated Statement of Cash Flows
Cash flows from operating activities
Loss from continued activities
Loss from discontinued activities
Finance income
Gain on disposal of FA's
Share-based payment non-cash charges
Foreign exchange difference
Depreciation/Amortisation
Tax received from continuing operations
Decrease/(Increase) in inventory
Decrease in trade and other receivables
Decrease in trade and other payables
Increase in rental fleet assets
Year to 31
March 2023
Year to 31
March 2022
$ 000's
$ 000's
(1,638)
(1,446)
(37)
(292)
225
5
1,162
(2,021)
280
1,681
1,853
(617)
(255)
(1,554)
767
(16)
(30)
194
(40)
840
163
0
478
(964)
320
(817)
Net cash from operating activities
921
(822)
Investing activities
Purchase of tangible fixed assets
Disposal proceeds of tangible fixed assets
Purchase of intangible fixed assets
Funds place on interest nearing deposit
Interest received
Net cash from investing activities
Financing activities
Share issue
Net cash from financing activities
Increase in cash and cash equivalents
Non-cash movements - foreign exchange
Cash and cash equivalents at beginning of period
(25)
2,266
(2,639)
1,500
37
1,139
(58)
30
(2,614)
(1,500)
16
(4,127)
-
-
145
145
2,060
(5)
3,296
(4,803)
40
8,059
Cash and cash equivalents at end of period
5,351
3,296
The accounting policies and notes on pages 38 to 64 form part of these financial statements.
37
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
1.
2.
NATURE OF OPERATIONS
The principal activity of Enteq Technologies Plc and its subsidiaries is that of acquiring, consolidating and
operating companies providing specialist reach and recovery products and technologies to the Technologies oil
and gas services market.
GENERAL INFORMATION AND STATEMENT OF COMPLIANCE WITH UK ADOPTED
INTERNATIONAL ACCOUNTING STANDARDS
Enteq Technologies Plc, the Group’s ultimate parent Company, is a limited liability Company incorporated and
domiciled in England and Wales. Its registered office is The Courtyard, High Street, Ascot, Berkshire, SL5 7HP.
Enteq’s shares are listed on the Alternative Investment Market of the London Stock Exchange. The consolidated
financial statements of the Group have been prepared in accordance with International Financial reporting
Standards (IFRSs) as adopted in accordance with UK adopted international accounting standards in conformity
with the requirements of the Companies Act 2006. They have been prepared under the assumption that the Group
operates on a going concern basis.
3. STANDARDS, AMENDMENTS AND INTERPRETATIONS OF ACCOUNTING POLICIES
Accounting standards, amendments and interpretations effective in 2023.
The Group has adopted all accounting standards that have come into effect as of 1 April 2022.
The adoption of these standards has had no effect on the financial results of the Group.
Standards, amendments and interpretations, which are effective for reporting periods beginning after the date of
these financial statements which have not been adopted early:
There are a number of standards, amendments to standards, and interpretations which have been issued that are
effective in future periods and which the Group has chosen not to adopt early, in particular:
• Amendments to IFRS 16 Leases – requirements on accounting for sale and leaseback after the date of
transaction (applicable on or after 1 January 2024)
IFRS 17 Insurance Contracts – applicable on or after 1 January 2023
•
• Amendments to IAS 1 Presentation of Financial Statements – further disclosure requirements including
additional detail around accounting policies (applicable on or after 1 January 2023)
• Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors – definition of
accounting estimates (applicable on or after 1 January 2023)
None of these are expected to have a significant effect on the Group.
4. ACCOUNTING POLICIES
Overall considerations
The consolidated financial statements have been prepared using the significant accounting policies and
measurement bases summarised below.
38
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
Basis of preparation
The Group’s financial statements have been prepared on an accrual basis and under the historical cost convention.
Monetary amounts are expressed in US dollars and are rounded to the nearest thousands, except for earnings per
share.
The company’s financial statements are presented in US dollars as the Company’s primary economic environment,
in which it operates and generates cash flows uses this currency.
Compliance with applicable law and IFRS
The consolidated Financial Statements comprise those of the Company and its subsidiaries (together the “Group”).
The consolidated Financial Statements of the Group and the individual Financial Statements of the Company have
been prepared on the going concern basis and under the historical cost convention in accordance with United
Kingdom adopted International Financial Reporting Standards (“IFRS”) and their interpretations issued by the
International Accounting Standards Board (“IASB”) that are effective or issued and adopted as at the time of
preparing these Financial Statements, and in accordance with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.
Basis of consolidation
The Group financial statements consolidate those of the parent Company and all of its subsidiaries as of 31 March
2023. Subsidiaries are all entities over which the Group has the power to control the financial and operating
policies. The Group obtains and exercises control through more than half of the voting rights. All subsidiaries have
a reporting date of 31 March 2023.
All transactions and balances between Group companies are eliminated on consolidation, including unrealised
gains and losses on transactions between Group companies. Where unrealised losses on intra-Group asset sales are
reversed on consolidation, the underlying asset is also tested for impairment from a Group perspective. Amounts
reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with
the accounting policies adopted by the Group.
Companies included in the consolidation:
Name
Enteq Technologies USA
Inc.
Enteq Upstream Ltd.
Jeteq Drilling Limited
Country of
incorporation
United States of America
UK
UK
Nature of business
Holding
Manufacturer of down hole drilling
equipment
Dormant
Dormant
100%
100%
100%
The financial statements of subsidiaries are included in the consolidated financial statements from the date at which
control commences to the date that control ceases. There are no non-conforming accounting policies in any of the
subsidiaries.
39
Going concern
At 31 March 2023 the Group has available cash balances of $5.4m ($4.8m 31 March 2022) and no debt.
The Group continues to adopt the going concern basis for the following 12 months in preparing its consolidated
financial statements. This is on the basis that the cash flow forecasts prepared up to 31 December 2024, under the
various scenarios detailed below, show sufficient cash resources to enable both the funding of working capital plus
the completion of the SABER engineering project. Factors taken into consideration when preparing the various
scenarios include:
Increase in the spend required to bring SABER to commercialisation;
•
• Delays in the commercialisation of the SABER project;
•
Significant reduction in the expected SABER related revenue generated in the period under review;
• The option to obtain external finance in order to provide SABER related working capital if required; and
In performing the going concern assessment, the directors consider there to be no effect of the currently ongoing
invasion of Ukraine by Russia on the Group’s workforce, supply chain, sales volumes and prices.
40
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
Foreign currencies
All companies in the Group have a functional currency of US dollars.
Foreign currency transactions are translated into the functional currency of the respective Group entity, using the
exchange rates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the
settlement of such transactions and from the re-measurement of monetary items denominated in foreign currency
at year-end exchange rates are recognised in profit or loss. The exchange rate used at the year-end is £1: $1.24 (31
March 2022 £1: $1.31). Non-monetary items are not retranslated at year-end and are measured at historical cost
(translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value
which are translated using the exchange rates at the date when fair value was determined.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker has been identified as the executive members of the Board, at
which level strategic decisions are made.
Revenue
Revenue arises mainly from the sale and rental of Measurement While Drilling (“MWD”) equipment. To
determine whether to recognise revenue, the Group follows a 5-step process:
Identifying the contract with a customer
Identifying the performance obligations
•
•
• Determining the transaction price
• Allocating the transaction price to the performance obligations
• Recognising revenue when/as performance obligation(s) are satisfied.
Recognition
Revenue is recognised as follows:
Revenue from contracts with customers
Revenue is derived from selling MWD equipment and is recognised at a point in time, when the Group satisfies
performance obligation by transferring the promised goods to its customers. Revenue is recognised when the
transfer of control takes place; this is taken to be at the point of despatch from the Group’s facilities when the full
legal title is transferred. The price is fixed from when the relevant sales order is received from the customers.
Rental - Operating leases
Revenue from rentals of MWD equipment received under operating leases is recognised in the profit and loss
account as the performance obligation under the lease contracts is satisfied over time, i.e. on a straight-line basis
over the period of the lease. This revenue is deemed to be outside of the scope of FRS 16 ‘Leases’ on the basis that
the lessee has the right to cancel the lease and return the equipment at any time after the minimum rental term
(typically the first 3 months). Following the return of the equipment the lessee has no further financial obligations
and at no time during the rental period does lessee obtain legal title to the equipment.
Interest
Interest income and expenses are reported on an accrual basis using the effective interest method.
Operating expenses
Operating expenses are recognised in profit or loss upon utilisation of the service. Expenditure for warranties is
recognised and charged in the period the warranty costs are incurred.
Exceptional items
Exceptional items are items of income and expenditure that, in the judgement of management, should be disclosed
separately on the basis that they are material, either by their nature or their size, to an understanding of our financial
performance and distort the comparability of our financial performance between periods.
Exceptional items relate to such categories as impairment charges, and severance costs.
41
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
Intangible Assets and Goodwill
a) Other intangible assets
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and
impairment.
b) Research and Development Expenditure
Research expenditure is recognised as an expense when it is incurred. Development expenditure is recognised as
an expense except that expenditure incurred on development projects is capitalised as long-term assets to the extent
that such expenditure is expected to generate future economic benefits. Development expenditure is capitalised if,
and only if the Group can demonstrate all of the following: -
•
•
•
•
•
•
its ability to measure reliably the expenditure attributable to the asset under development;
the product or process is technically and commercially feasible;
its future economic benefits are probable;
its ability to use or sell the developed asset;
the availability of adequate technical, financial and other resources to complete the asset under
development; and
its intention to complete the intangible asset and use or sell.
Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses, if
any. Development expenditure initially recognised as an expense is not recognised as assets in the subsequent period.
Development expenditure is amortised on a straight-line method over the useful lives of each product from when
the products are ready for sale or use. In the event that the expected future economic benefits are no longer probable
of being recovered, the development expenditure is written down to its recoverable amount.
Subsequent measurement
All intangible assets including capitalised internally developed software, are accounted for using the cost model
whereby capitalised costs are amortised on a straight-line basis over their estimated useful lives, as these assets are
considered finite. Residual values and useful lives are reviewed at each reporting date. In addition, they are subject
to impairment testing as described below.
Amortisation
Amortisation is charged to overheads, within total administrative expenses, in the income statement on a straight-
line basis over the estimated useful lives of the intangible assets unless such lives are indefinite. Other intangible
assets are amortised from the date they are available for use. The estimated useful lives are determined separately
for each acquisition and fall within the following ranges:
IPR&D technology
5 to 20 years
Impairment testing of other intangible assets and property, plant and equipment
For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent
cash inflows (cash-generating units). As a result, two impairment tests have been carried out; one associated with
the intangible asset relating to the SABER project; and the other with the assets excluding the SABER project.
There is deemed to be two cash generating units (“CGU”) within the Group one for each of the impairment tests
stated above.
An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount
exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-in use. To determine
the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines
a suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment
testing procedures are directly linked to the Group’s latest approved budget, adjusted as necessary to exclude the
effects of future reorganisations and asset enhancements. Discount factors are determined individually for each cash-
generating unit and reflect management’s assessment of respective risk profiles, such as market and asset-specific
risks factors. Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated
42
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
to that cash-generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-
generating unit. All assets are subsequently reassessed for indications that an impairment loss previously recognised
may no longer exist. An impairment charge is reversed if the cash-generating unit’s recoverable amount exceeds its
carrying amount, but only to the extent that this does not exceed the original carrying value, had no impairment been
recorded.
Property, plant and equipment
Tangible Property, Plant & Equipment are stated at cost, net of depreciation and any provision for impairment.
Depreciation is included within administrative expenses for all tangible assets at rates calculated to write off the
cost, less estimated residual value of each asset on a straight-line basis over useful economic life, as follows:
Land
Leasehold improvements
Buildings
Production equipment
Other equipment
Rental assets
shortest
Not depreciated
Over life of lease, or useful economic life, if shorter
10 to 35 years
4 to 7 years
3 to 7 years
Over the life of the asset or the rental period, whichever is the
Management review the useful economic life and residual values of all assets on an annual basis.
43
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
The Group as a lessee
For any new contracts entered into on or after 1 April 2019, the Group considers whether a contract is, or contains
a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying
asset) for a period of time in exchange for consideration’. To apply this definition the Group assesses whether the
contract meets three key evaluations which are whether:
• the contract contains an identified asset, which is either explicitly identified in the contract or implicitly
specified by being identified at the time the asset is made available to the Group
• the Group has the right to obtain substantially all of the economic benefits from use of the identified asset
throughout the period of use, considering its rights within the defined scope of the contract
• the Group has the right to direct the use of the identified asset throughout the period of use.
The Group assess whether it has the right to direct ‘how and for what purpose’ the asset is used throughout the
period of use.
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet.
The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any
initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of
the lease, and any lease payments made in advance of the lease commencement date (net of any incentives
received). The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement
date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also
assesses the right-of-use asset for impairment when such indicators exist. At the commencement date, the Group
measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the
interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate. Lease
payments included in the measurement of the lease liability are made up of fixed payments (including in substance
fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value
guarantee and payments arising from options reasonably certain to be exercised. Subsequent to initial
measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect
any reassessment or modification, or if there are changes in in-substance fixed payments. When the lease liability
is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-
use asset is already reduced to zero.
The Group as a lessor
The Group’s accounting policy under IFRS 16 has not changed from the comparative period. As a lessor the Group
classifies its leases as either operating or finance leases. A lease is classified as a finance lease if it transfers
substantially all the risks and rewards incidental to ownership of the underlying asset, and classified as an operating
lease if it does not.
The Group as a lessee
Finance leases
Management applies judgment in considering the substance of a lease agreement and whether it transfers
substantially all the risks and rewards incidental to ownership of the leased asset. Key factors considered include
the length of the lease term in relation to the economic life of the asset, the present value of the minimum lease
payments in relation to the asset’s fair value, and whether the Group obtains ownership of the asset at the end of
the lease term. For leases of land and buildings, the minimum lease payments are first allocated to each component
based on the relative fair values of the respective lease interests. Each component is then evaluated separately for
possible treatment as a finance lease, taking into consideration the fact that land normally has an indefinite
economic life. The interest element of lease payments is charged to profit or loss, as finance costs over the period
of the lease.
Operating leases
All other leases are treated as operating leases. Where the Group is a lessee, payments on operating lease
agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as
maintenance and insurance, are expensed as incurred.
The Group as a lessor
Rental income is recognised on a straight-line basis over the term of the lease.
44
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument. Financial assets are derecognised when the contractual rights to the cash
flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are
transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the
transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for
transaction costs (where applicable).
Financial assets are classified into the following categories:
• amortised cost
• fair value through profit or loss (FVTPL)
• fair value through other comprehensive income (FVOCI).
In the periods presented the corporation does not have any financial assets categorised as either FVTPL or
FVOCI.
All income and expenses relating to financial assets that are recognised in profit or loss are presented within
finance costs, finance income or other financial items, except for impairment of trade receivables which is
presented within other expenses.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated
as FVTPL):
• they are held within a business model whose objective is to hold the financial assets and collect
its contractual cash flows
• the contractual terms of the financial assets give rise to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting
is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most
other receivables fall into this category of financial instruments.
Impairment of financial assets
IFRS 9’s impairment requirements use more forward-looking information to recognise expected credit losses –
the ‘expected credit loss (ECL) model’. Instruments within the scope of the new requirements included loans
and other debt-type financial assets measured at amortised cost and FVOCI, trade receivables, contract assets
recognised and measured under IFRS 15 and loan commitments and some financial guarantee contracts (for the
issuer) that are not measured at fair value through profit or loss.
Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract
assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in
contractual cash flows, considering the potential for default at any point during the life of the financial
instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking
information to calculate the expected credit losses. As the Group has so few customers with significant
outstanding receivable balances the expected credit losses can be assessed on an individual customer by customer
basis.
Classification and measurement of financial liabilities
The Group’s financial liabilities include borrowings and trade and other payables. Financial liabilities are initially
measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a
financial liability at fair value through profit or loss.
45
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost, for inventory items that involve significant
manufacturing time, includes all expenses directly attributable to the manufacturing process as well as suitable
portions of related production overheads, based on normal operating capacity. The cost of inventory that do not
incur significant levels of manufacturing time are held at material cost only. Costs of ordinarily interchangeable
items are assigned using the first in, first out cost formula. Net realisable value is the estimated selling price in the
ordinary course of business less any applicable selling expenses.
Taxation
The charge for current income tax is based on the results for the period as adjusted for items that are non-assessable
or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the Statement of
Financial Position date.
Deferred income tax is the income tax expected to be payable or recoverable on differences between the carrying
amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation
of taxable profit and is accounted for using the Statement of Financial Position liability method. Deferred income
tax is provided in full and is recognised on temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred income tax liabilities are generally recognised on all taxable temporary differences and deferred tax assets
are recognised to the extent that it is probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference
arises from goodwill (or any discount on acquisition) or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting
profit. Deferred income tax is measured on an undiscounted basis at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised, based on tax rates and laws enacted or substantively
enacted at the balance sheet date. Deferred income tax is charged or credited in the income statement, except when
it relates to items charged or credited directly to equity or other comprehensive income, in which case the deferred
tax is also dealt with in equity or other comprehensive income. Deferred income tax liabilities are recognised on
taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the
reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future. Deferred income tax assets and liabilities are offset when they relate to income taxes levied by
the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly
liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant
risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements
entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after
deducting all of its liabilities.
Trade and other payables
Trade and other payables are not interest-bearing and are recognised initially at fair value. Subsequently they are
carried at amortised cost.
Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
Equity, reserves and dividend payments
Share capital represents the nominal value of shares that have been issued. Share premium includes any premiums
received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from
share premium, net of any related income tax benefits.
46
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
Retained earnings include all current and prior period retained profits. All transactions with owners of the parent
are recorded separately within equity. Dividend distributions payable to equity shareholders are included in other
liabilities when the dividends have been approved in a general meeting prior to the reporting date.
Share based payment reserve
Represents the total accumulated share-based payment charge less any amounts transferred following the issue
of the relevant shares.
Pensions and short-term employee benefits
Pensions
The Group does not operate its own pension scheme but makes contributions to an individual’s personal pension
scheme, where appropriate.
Share based payments
The group operated two schemes. One is the Enterprise Management Incentive plan the other the
Performance Share plan. Both these schemes have options that vest three years after the date of grant and
expired ten years after that date. The total amounts to be expensed to the Profit and Loss account over the
vesting period of the options is determined by reference to the fair value at the date of granting and the number
of awards that are expected to vest. The charge is annually reassessed, based on the total number of options
expected to vest. The movement in cumulative expense is recognised in the profit and loss, with a
corresponding entry to the share-based payment reserve. The Enterprise Management Incentive plan does
not have any performance conditions attached whereas the Performance Share plan does.
The Performance Share plan contains the following elements:
Market based:
The grant date fair value granted takes into account the impact of any market conditions and does not take
into account service and non-market conditions. The fair value is not adjusted for subsequent changes in the
fair value and differences between estimated and actual outcome of market conditions. If a market condition
is not met, then the share based payment cost is nevertheless recognised, assuming that all other vesting
conditions are met and even though an employee would not be entitled to receive the share based payment.
Non-market based:
Recognition is initially based on the number of instruments for which any required non-market conditions are
expected to be met. Subsequently, recognition of share based payment cost is trued-up for changes in
estimates regarding the achievement of the conditions at each reporting date and at vesting date so that to
reflect the number of instruments for which non-market conditions actually satisfied. If a non-market
condition is not met, then no share based payment cost is recognised on cumulative basis and any previously
recognised cost is reversed.
47
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
Critical accounting estimates and judgements
The preparation of the financial statements in conforming with adopted IFRS requires management to make
judgements, estimates and assumptions that affect the application of policies and reported amounts of assets,
liabilities, income, expenses and contingent liabilities. These will seldom equal the related actual results and
adjustments will consequently be necessary. Estimates are continually evaluated based on experience, consultation
with experts and reasonable expectations of future events. The carrying value of both the inventory and intangible
assets are the key areas where significant judgement are required.
The areas of critical estimates include inventory valuation and impairment assessments and cost recognised relating
to the R&D projects capitalised within intangible assets. Accounting judgements are applied in determining the
carrying amounts of the following significant assets and liabilities:
Impairment of
intangible assets
Costs recognised
relating to R&D
projects capitalised
An impairment test is carried out annually and involves a significant level of
judgement and estimates regarding factors such as future growth rates. Senior
management base this judgement on the best available industry and market
data at that point in time. The critical judgements and estimates are set out in
note 11. As the Group strategy unfolds, these assumptions may change. Any
significant downward variance in the assumptions may result in an
impairment.
The Group has to apply judgement in determining whether costs incurred on
R&D projects should be capitalised within intangible assets or expensed. The
Group has a policy of capitalising development costs as set out above. The
judgement is based on the assessment of the nature of capitalised costs and
the level of these costs are considered to be directly related based on the
criteria set out above, including some of the salary costs. This includes a
portion of directors’ and employees’ salaries as stated in the note 6.
Recoverability of
trade debtors
In assessing the recoverability of these assets, the Group uses its historical
experience, external indicators and forward-looking information to calculate
the expected credit losses.
48
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
5. SEGMENTAL REPORTING
For management purposes, the Group is currently organised into a single business unit, the Drilling Tools division,
which is currently based solely in the USA.
The principal activities of the group is the design, manufacture and selling of specialised parts and products for
Directional Drilling and Measurement While Drilling operations for use in the energy exploration and services
sector of the Oil and Gas industry. Revenue is only generated by the selling activity.
At present, there is only one operating segment and the information presented to the board is consistent with
the consolidated profit and loss statement and the consolidated statement of financial position.
The revenues, net assets and non-current assets of the Group can be analysed by geographic location (post-
consolidation adjustments) as follows:
Revenues
United States of America
China
Rest of the world
Europe
Central Asia
Australasia
Total Group revenue
Contracts with customers
Operating lease income
Total Group revenue
Net Assets
Europe (UK)
United States
Total Group net assets
Non-current Assets
Europe (UK)
United States
Total Group non-current assets
31 March
2023
$ 000’s
5,846
278
56
38
22
3
6,245
31 March
2023
$ 000’s
5,701
544
6,245
31 March
2023
$ 000’s
4,276
8,800
13,076
31 March
2023
$ 000’s
63
6,484
6,547
31 March
2022
$ 000’s
6,201
187
228
51
396
243
7,306
31 March
2022
$ 000’s
6,364
942
7,306
31 March
2022
$ 000’s
3,649
11,880
15,529
31 March
2022
$ 000’s
-
6,649
6,649
All of the Group’s revenue arises from the sale and rental of specialised parts and products for Directional Drilling
and Measurement While Drilling operations. The Group had 2 customers that contributed in excess of 10% of the
Group’s total sales for the year (2022: 2). These customers contributed $2,903k and $1,430k respectively. (2022:
$4,086k and $1,014k). No revenue relates to customers based in the UK (2022: none).
All revenue in year ended 31 March 2023 were generated from discontinuing operations. Refer to note 24 for
details on performance of discontinuing operations.
49
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
6.
EMPLOYEES AND DIRECTORS
Wages and salaries
Social security costs
Equity settled transactions – in lieu of emoluments
Equity settled transactions – share option and PSP charge
Pension and health costs
31 March 2023
$ 000’s
31 March 2022
$ 000’s
1,119
164
406
225
237
2,151
1,325
160
323
194
274
2,276
During the year a total of $678k of the above salaries were capitalised as part of intangible assets (2022: $666k).
The average monthly number of employees during the year was as follows:
Directors
Senior management
Sales & marketing
Manufacturing & Technical
Finance & administration
Directors' remuneration
Wages and salaries including social security costs
Equity settled transactions
Gains on LTIPs exercised
Pension and health costs
31 March 2023
No.
5
1
2
4
2
14
31 March 2022
No.
5
2
2
5
2
16
31 March 2023
$ 000’s
31 March 2022
$ 000’s
304
406
-
54
764
510
323
88
78
999
50
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
The highest paid Director in the year is Andrew Law. Information regarding the highest paid director is as
follows:
Emoluments
$
000’s
327
$ 000’s
329
The directors are deemed to be 'Key Management'. This is detailed further in Note 22. Further details of
emoluments paid to directors, including details of the highest paid director are contained in the Remuneration
Committee report on pages 20 to 22. During the year a total of $34k of these emoluments were capitalised as part
of intangible assets (2022: $67k).
Share plans
The Group has two schemes as set out below;
Details of the share options outstanding at the end of the year are shown in note 19.
Enterprise Management Incentive Plan
The Group has established a share option plan that entitles all employees to purchase shares in the Company. See
note 19 for further details.
Performance Share Plan
The Group has established a share plan that entitles certain senior employees to acquire shares in the
Company if certain performance conditions are met. See note 19 for further details.
7. NET FINANCE INCOME
Interest earned on bank deposits
37
16
31 March 2023
$ 000’s
31 March 2022
$ 000’s
8. LOSS BEFORE INCOME TAX
The loss before income tax is stated after charging/(crediting):
31 March 2023
$ 000’s
31 March 2022
$ 000’s
Auditors' remuneration:
- Fees payable to the Company’s auditor for the audit of the
Company’s and Group’s annual accounts
- Tax compliance services
Share based payments (both schemes)
Foreign exchange charges/(gains)
74
-
225
(5)
77
20
194
40
51
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
9. INCOME TAX
Analysis of tax expense
No liability to UK corporation tax arose on ordinary activities for the period.
Factors affecting the tax charge
The tax assessed for the period is different from the standard rate of corporation tax in the UK. The difference
is explained below:
Loss on ordinary activities before tax
Loss on ordinary activities multiplied by the
standard rate of corporation tax in the UK of 19% (2022: 19%):
Effects of:
Items not subject to corporation tax
Tax losses to carry forward
R&D tax credit
Total income tax
31 March
2023
$ 000’s
31 March
2022
$ 000’s
(3,084)
(586)
473
113
280
280
(787)
(149)
(31)
181
-
-
There has been no deferred taxation recognised in these financial statements due to the uncertainty surrounding
the timing of the recovery of these amounts. The total losses available to the Group in the relevant tax
jurisdictions are as follows: UK $0.0m; United States $22.6m (2022: UK $0.5m; United States $22.2m). There
were no significant deferred tax liabilities. These tax losses have no expiry date. Tax losses for which no
deferred tax balances have been recognised are disclose in Note 13.
52
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
10. EARNINGS PER SHARE AND DIVIDENDS
Basic earnings per share
Basic earnings per share is calculated by dividing the loss attributable to ordinary shareholders for the year of
$2,804k (31 March 2022: loss of $787k) by the weighted average number of ordinary shares in issue during the
year of 69,484k (31 March 2022: 68,604k).
As the Group is loss making, any potential ordinary shares have the effect of being anti-dilutive. Therefore, the
diluted EPS is the same as the basic EPS. As the year end share price is below the weighted average option price
of all the options issued, the adjusted diluted EPS is the same as adjusted EPS.
The number of outstanding share options, including senior managers, that are not included in the above figures are
as follows:
EMI plan
PSP plan
Total
.
31 March 2023
000’s
31 March 2022
000’s
170
5,616
5,786
233
3,670
3,903
Per-share
amount
US cents
(4.0)
Per-share
amount
US cents
(1.1)
March 2023: EPS
Weighted
Loss attributable to ordinary shareholders
Earnings
average number
of shares
000’s
69,484
$ 000’s
2,804
March 2022: EPS
Weighted
Loss attributable to ordinary shareholders
Earnings
average number
of shares
000’s
68,604
$ 000’s
787
During the year Enteq Technologies Plc did not pay any dividends (2022: nil).
53
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
11. INTANGIBLE ASSETS
Other Intangible Assets
Cost:
As at 1 April 2022
Transfer
Capitalised in period
As at 31 March 2023
Amortisation/Impairment:
As at 1 April 2022
Writte off during the year
Charge for the year
As at 31 March 2023
Net Book Value:
As at 1 April 2022
As at 31 March 2023
Cost:
As at 1 April 2021
Transfers
Disposal
Capitalised in period
As at 31 March 2022
Amortisation/Impairment:
As at 1 April 2021
Disposal
Charge for the year
As at 31 March 2022
Net Book Value:
As at 1 April 2021
As at 31 March 2022
Developed
technology
$ 000’s
IPR&D
technology
$ 000’s
Brand
names
$ 000’s
Customer
relationships
$ 000’s
13,237
102
-
13,339
13,041
(110)
408
13,339
15,267
(102)
2,639
17,804
11,320
-
-
11,320
1,240
-
-
1,240
1,240
-
-
1,240
196
-
3,947
6,484
-
-
-
-
-
-
-
-
-
-
-
-
Total
$ 000’s
29,744
-
2,639
32,383
25,601
(110)
408
25,899
4,143
6,484
12,842
275
-
120
13,237
12,842
-
199
13,041
13,048
(275)
-
2,494
15,267
11,320
-
-
11,320
1,240
-
-
-
1,240
1,240
-
-
1,240
20,586
-
(20,586)
-
-
47,716
-
(20,586)
2,614
29,744
20,586
(20,586)
-
-
45,988
(20,586)
199
25,601
-
196
1,728
3,947
-
-
-
-
1,728
4,143
The main categories of Intangible Assets are as follows:
Developed technology:
This is technology which is currently commercialised and embedded within the current product offering.
IPR&D technology:
This is technology which is in the final stages of field testing, has demonstrable commercial value and is expected
to be launched within the foreseeable future.
Brand names:
The value associated with the various trading names used within the Group.
Customer relationships:
The value associated with the on-going trading relationships with the key customers acquired.
54
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
Impairment Review
Due to the sale of the XXT business assets, there is now considered to be only one main cash generating unit
(“CGU”) – that is relating to the SABER project. This CGU is in the carried forward value for IPR&D technology
in the table above with a value of $6,484k (2022: $3,947k)
The recoverable amount of the CGU at the balance sheet date was assessed as a directors’ valuation (2022:
directors’ valuation) and is determined from value in use calculations both where the asset is currently in use or
will be in the near future. The directors have applied a discounted cashflow approach to determine the carrying
value for the SABER project and intangible asset being carried in these financial statements.
The key assumptions made by the directors (2022: directors) for the discounted cash flow workings are:
- the expected roll out of the technology over five years to 31 March 2028 (2022: not disclosed);
- an exit value at the beginning of year six on an estimated multiple;
- that the roll out will not be significantly impacted by competing technologies (2022: same assumption);
- that the Group will introduce a phased roll out of rental units of between 5 and 20 in each key region from 1 April
2024 onwards (2022: not disclosed) with a typical number of days usage per unit;
- each rental unit will generate a similar amount of revenue per unit irrespective of the region in which it operates
(2022: not disclosed);
- the expected operating life of each rental unit is >5 years and annual servicing costs for each have been included
in the workings (2022: not disclosed);
- that the expected revenues arise from projects based upon agreements in place as well as agreements which
currently do not yet exist and that the Group will put in place an appropriate plan to field the number of rental units
in the model (2022: same assumption);
- that the company currently has the financial resources to build the number of rental units and that there is no
requirement at present to raise additional income from new fund raises (2022: same assumption), whilst noting
that additional scenarios are continuously under evaluation to provide financing to further accelerate fleet build-
up;
- applying a discount rate to cashflow of 25% (2022: 13.4%) assessed by a review of discount rates for projects
within similar and competing sectors which was considered to provide a reasonable estimate of a weighted average
cost of capital for a company benefiting from the assumed roll out;
- that the field testing is successful and completed and that the technology can be rolled out commercially from 1
January 2024 without any fundamental developmental challenges.
Changes to the above assumptions would impact the valuation assessment.
The Directors believe that the key sensitivities in the valuation are as follows:
(i)
The directors have assumed a phased build-up of rental units from 1 January 2024 with between 5 and 20
rental units to be in operation in each key region as part of a phased build-up from 1 April 2024 onwards.
Sensitivity workings with a reduction to the total of 10 rental units showed a decrease in valuation by
between $2 million to $4 million.
The discount rate applied to the cashflows. Sensitivity workings with a discount rate 5% higher at 30%
would decrease the valuation by between $3.0 million and $6.0 million.
Inflation – an increase in the inflation assumption above that assumed by the directors valuation of 5%.
Growth rates - The directors have assumed growth rates in revenues of 33% once the SABER business
has been established, resulting from the fleet expansion.
(ii)
(iii)
(iv)
The Directors have not accounted for the possibility of any onerous obligations arising with the contracts as there
is no reason to expect that these will arise at this stage in the business life cycle.
Currently the SABER project is towards the end of the development phase and is forecast to be cash generating
from 31 May 2024.
55
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
Amortisation
All categories of intangible assets, apart from the IPR&D technology, are being amortised over their respective
useful lives, on a straight-line basis. The rotary steerable project will have its useful life assessed once the field trials have been
completed which will give a better estimate of the useful life of this asset.
56
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
12. PROPERTY, PLANT AND EQUIPMENT
Cost:
As at 1 April 2022
Additions
Transfers
Disposals
As at 31 March 2023
Depreciation:
As at 1 April 2022
Charge for the year
Disposals
As at 31 March 2023
Net Book Value:
As at 1 April 2022
As at 31 March 2023
Cost:
As at 1 April 2021
Additions
Transfers
Disposals
As at 31 March 2022
Depreciation:
As at 1 April 2021
Charge for the year
Disposals
As at 31 March 2022
Net Book Value:
As at 1 April 2021
As at 31 March 2022
Land
Buildings
$000’s
$000’s
Production
Equipment
$000’s
Rental
Fleet
$000’s
Other
Equipment
$000’s
461
-
-
(461)
-
-
-
-
-
461
-
2,440
-
-
(2,440)
-
862
84
(946)
-
1,578
-
129
-
-
-
129
94
25
-
119
35
10
834
-
(33)
(801)
-
516
573
(1,089)
-
318
-
319
25
-
(13)
331
205
86
(13)
278
114
53
Land
Buildings
$000’s
$000’s
Production
Equipment
$000’s
Rental
Fleet
$000’s
Other
Equipment
$000’s
461
-
-
-
461
-
-
-
-
2,425
15
-
-
2,440
775
87
-
862
461
461
1,650
1,578
159
-
-
(30)
129
107
17
(30)
94
52
35
17
1,318
(501)
-
834
9
507
-
516
8
318
292
43
-
(16)
319
191
30
(16)
205
101
114
Total
$000’s
4,183
25
(33)
(3,715)
460
1,677
768
(2,048)
397
2,506
63
Total
$000’s
3,354
1,376
(501)
(46)
4,183
1,082
641
(46)
1,677
2,272
2,506
The depreciation of the rental fleet is being charged as an administrative expense as opposed to being shown within
cost of sales.
57
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
13. DEFERRED TAX
No deferred tax balances have been recognised in the statement of financial position on the basis that the only
material balances related to taxable losses carried forward, which are uncertain as to their recoverability.
As disclosed in Note 9, there are no unused tax losses in the UK and in the US of $22.6m (tax value of $6.8m at
30%) (2022: UK $0.5m; US $22m), for which deferred tax assets have not been recognised.
14. TRADE AND OTHER RECEIVABLES
Trade Receivables
Prepayments
Other receivables
The above can be analysed as follows:
Non-current
Current
31 March 2023
$000’s
31 March 2022
$000’s
98
72
67
237
-
237
237
3,250
201
86
3,537
-
3,537
3,537
Management believe that the carrying value is an approximation of fair value. The below includes disclosures relating
to the credit risk exposures and analysis relating to the allowance for expected credit losses. Both the current and
comparative impairment provisions apply the IFRS 9 expected loss model.
Bad debt provision
As at 1 April
Allowances used
As at 31 March
Trade receivables were impaired by $212k (2022:Nil) .
15. INVENTORIES
Finished Goods
Work in progress
Raw Materials
Impairment
Assets held for sale (Note 25)
31 March 2023
$000’s
31 March 2022
$000’s
366
-
366
422
(56)
366
31 March 2023
$000’s
1,136
102
81
1,319
(587)
(732)
-
31 March 2022
$000’s
2,294
39
77
2,410
-
-
2,410
The value of inventory recognised within cost of sales was $4,777k (2022: $4,678k). The balance as at 31 March
2023 includes no provision for slow moving stock (31 March 2022: $nil).
58
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
16. CASH AND CASH EQUIVALENTS
Denominated in USD
Denominated in GBP
31 March 2023
$000’s
31 March 2022
$000’s
5,184
167
5,351
3,038
258
3,296
There was no interest bearing deposit as at year end (2022: $1,500k)
17. CALLED UP SHARE CAPITAL
Allotted, issued and fully paid ordinary shares of GBP 0.01 nominal value:
As at 1 April 2022
Issued during the year
As at 1 March 2023
Number
000’s
69,014
710
69,724
Share
Capital
$000’s
1,072
8
1,080
Share
Premium
$000’s
91,919
118
92,037
All shares issued carry the same voting rights.
There were no costs associated with the share capital issued during the year.
18. TRADE AND OTHER PAYABLES
Trade payables
Accrued expenses
Social security and other taxes
Other creditors
31 March 2023
$000’s
31 March 2022
$000’s
788
331
120
4
1,243
1,381
237
194
51
1,863
Other creditors include customer deposits and US sales tax payable. Management believe the carrying value is
an approximation of the fair value.
59
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
19. EMPLOYEE BENEFITS
Enterprise Management Incentive Plan
The Group has established a share option plan that entitles all employees to purchase shares in the Company.
During the year to 31 March 2023 grants under the plan were made. In accordance with the scheme rules options
are exercisable at the market price of the shares at the date of the grant once all vesting conditions have been met.
Options vest after three years from the date of grant and expire after ten years. Options are settled by the issue of
new shares.
The number and weighted average exercise prices of share options are as follows:
31 March 2023
31 March 2022
Weighted
average exercise
price (pence)
Number of
options
Weighted
average exercise
price (pence)
Number of
options
Outstanding at the beginning of the period
Granted during the period
Exercised during the period
Forfeited during the period
Outstanding at the end of the period
Exercisable at the end of the period
Highest exercise price (p)
Lowest exercise price (p)
19.1
14.0
-
14.5
14.4
-
17.3
14.00
234,500
170,000
-
(234,500)
170,000
-
20.2
17.3
-
13.6
19.1
23.3
31.5
12.0
397,500
250,000
-
(413,000)
234,500
49,500
The weighted average remaining contractual life of all outstanding share options is 505 days (2022: 1,130 days).
The fair value of services received in return for share options are measured by reference to the fair value of share
options granted. The estimate of the fair value of the services received is measured based on the Black-Scholes
model and expectations of early exercise are incorporated into this model.
The grant made during the year were as follows:
Grant Date
Fair value for option at grant date (pence)
Weighted average share price at date of grant (pence)
Weighted average exercise price
Expected volatility
Option life
Risk free interest rate
July
2022
14.0
14.0
14.0
50%
10 years
2.5%
The expected volatility is based on the historic volatility. No dividends have been assumed.
During the year, a charge of $13k (2022: credit of $26k) has been included within the income statement in relation
to the above options.
Performance share Plan
On the 17 September 2014, a Performance Share Plan was introduced for the executive directors and other senior
managers. In accordance with the scheme rules options are exercisable at the nominal value of the shares at the
date of the grant once all vesting conditions have been met. Options vest after three years from the date of grant
and expire after ten years. Options are settled in equity.
60
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
The number and weighted average exercise prices of share options are as follows:
Outstanding at the beginning of the period
Granted during the period
Exercised during the period
Lapsed during the period
Outstanding at the end of the period
Exercisable at the end of the period
31 March 2023
Number of options
31 March 2022
Number of options
4,604,792
1,946,207
-
(934,616)
5,616,383
-
3,825,138
1,861,286
(540,816)
(540,816)
4,604,792
-
The weighted average remaining contractual life of all outstanding Performance Share Plan options is 428 days
(2022: 3,066 days).
The fair value of services received in return for share options are measured by reference to the fair value of share
options granted, measured using the Black-Scholes model and expectations of early exercise are incorporated into
this model. The balance is adjusted each year in accordance with the number of awards expected to vest
The grant made during the year were as follows:
Grant Date
General
Option price (pence)
Share price at date of grant
Expected volatility
Risk free interest rate
Option life
Market based conditions (TSR)
Fair value for option at grant date (pence)
Non market based conditions (EBITDA)
Option valuation
July 2022
1.0
14.5
25%
0.43%
10 years
3.3
13.5
During the year a charge of $212k (2022: Charge of $220k) has been included within the income statement as a
charge, for the above options.
The charge of $225k (2022: charge of $194k) shown in note 8 includes the charges for both the above schemes.
61
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
20. OPERATING LEASES
The Group has lease agreements in respect of properties and other equipment, for which payments extend over a
number of years. The total gross payments over the life of these leases, split by maturity date and type, are as
follows:
At 31 March 2023
Within one year
Within two to five years
At 31 March 2022
Within one year
Within two to five years
Property Equipment
$000’s
$000’s
Total
$000’s
23
23
46
2
6
8
25
29
54
Property Equipment
$000’s
$000’s
Total
$000’s
-
-
-
2
6
8
2
6
8
The lease expense during the year amounted to $25k (2022: $2k), representing the minimum lease payment.
21. OPERATING LEASES AS LESSOR
The Group leases out equipment under operating leases, the carrying value of which is shown in note 12.
Rental income during the year amounts to $544k (2022: $931k) included within revenue.
22. RELATED PARTY DISCLOSURES
Transactions with key management personnel
The remuneration of the current directors, who are the key management personnel of the Group, is set out in the
remuneration committee report for each of the categories specified in IAS 24: Related party disclosures.
23. ULTIMATE CONTROLLING PARTY
There is no ultimate controlling party.
24. LOSS FROM DISCONTINUING OPERATIONS
(i) Description
On 11 April 2023, the XXT intellectual property (previously amortised over time to a book value of nil) and
associated product lines and trademark, together with selected technology agreements, customer account
receivable balances, and inventory were sold for a consideration of $3,161k, made up of an upfront payment
of $1,886k and a deferred consideration of $1,275k. The deferred consideration consists of a guaranteed
payment pf $587k payable over a 12 month period following disposal and a contingent consideration of $688k
which is subject to the recoverability of the receivable sold. The contingent consideration was not considered
in the calculation of the net realisable value of asset held for sale.
The business relating to the XXT has been reclassified as discontinued operation and the associated assets
were classified as held for sale.
62
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
(ii) Financial performance
Revenue
Cost of Sales
Admin expenses
Amortisation
Other exceptional items
Foreign exchange profit on operating activities
Operating loss
Finance income
Loss before tax
Tax
Loss from discontinuing operations
Cashflow from discontinuing operations
Net cash from operation activities
Net cash from investing activities
Net cash from financing activities
Net cashflow for the year from discontinuing operations
25. ASSETS HELD FOR SALE
The following asset has been held for sale:
Accounts receivable < 1yr
Stock - held for resale
There was no liability directly associated with asset held for sale.
31-Mar-23
$000’s
31-Mar-22
$000’s
6,245
(4,777)
(1,984)
(408)
(522)
-
(1,446)
7,306
(4,678)
(1,655)
(199)
(7)
-
767
- -
(1,446)
-
(1,446)
767
-
767
31-Mar-23
$000’s
31-Mar-22
$000’s
(1,446)
-
-
767
-
-
(1,446)
767
31 March 2023
$000’s
31 March 2022
$000’s
1,452
732
2,184
-
-
-
63
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
Financial Risk Management
26. FINANCIAL INSTRUMENTS
Exposure to credit, interest rate, and currency and liquidity risk arises in the normal course of the Group’s business.
The Group’s overall strategy to minimise this risk is discussed below.
Objectives, policies and procedures
Treasury operations are conducted within a framework of policies and guidelines authorised by the Board and are
subject to internal control procedures. The objectives of the framework are to provide flexibility whilst minimising
risk and prohibiting speculative transactions or positions to be taken.
The Group’s principal financial instruments comprise cash and lines of bank credit. The main purpose of these
financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets
and liabilities such as trade receivables and trade payables, which arise directly from its operations.
The main risks arising from the Group’s financial instruments are credit, interest rate, and currency and liquidity
risks. The Board reviews and agrees policies for managing these risks and they are summarised below.
64
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
Credit risk
Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The group is exposed to
credit risk from financial assets including cash and cash equivalents held at banks, trade and other receivables.
Credit risk management
The credit risk is managed on a group basis based on the Group's credit risk management policies and procedures.
The credit risk in respect of cash balances held with banks and deposits with banks are managed via diversification
of bank deposits, and are only with major reputable financial institutions.
The Group continuously monitors the credit quality of customers based on a credit rating scorecard. Where
available, external credit ratings and/or reports on customers are obtained and used. The group's policy is to deal
only with credit worthy counterparties. The credit terms range between 30 and 90 days. The credit terms for
customers as negotiated with customers are subject to an internal approval process which considers the credit rating
scorecard. The ongoing credit risk is managed through regular review of ageing analysis, together with credit limits
per customer.
Trade receivables consist of a large number of customers in various industries and geographical areas.
Security
The Group does not hold any security on the trade receivables balance. In addition, the group does not hold
collateral relating to other financial assets (e.g. derivative assets, cash and cash equivalents held with banks).
Trade receivables
The Group applies the IFRS 9 simplified model of recognising lifetime expected credit losses for all trade
receivables as these items do not have a significant financing component.
As the Group has so few customers with significant outstanding receivable balances the expected credit losses
can be assessed on an individual customer by customer basis.
The expected loss rates are based on the payment profile for sales over the past 48 months before 31 March 2022
and 1 April respectively as well as the corresponding historical credit losses during that period. The historical rates
are adjusted to reflect current and forwarding looking macroeconomic factors affecting the customer's ability to
settle the amount outstanding. On this basis the expected loss associated with the outstanding unprovided trade
debtor balances for is not material.
Trade receivables are written off when there is no reasonable expectation of recovery. Failure to make payments
within 180 days from the invoice date and failure to engage with the Group on alternative payment arrangement
amongst other is considered indicators of no reasonable expectation of recovery.
Interest rate risk
The Group’s exposure to risk for changes in market interest rates relates primarily to the Group’s cash and cash
equivalents. The Group minimises that risk by using a series of short-term interest rate fixes.
A 1% increase in interest rates, in the average balances held on deposit during the year end, would result in an
increase in finance income of $54k per annum.
Foreign currency risk
The Group is exposed to foreign currency risk on cash balances denominated in sterling, as its reporting currency
is USD. The amount of currency held in sterling is reviewed on a regular basis, together with the cash flows
denominated in sterling, to ensure that this risk is minimised.
The Group’s funding strategy is to ensure that the business has sufficient resources to meet its various financial
commitments on an on-going basis. It achieves this objective by actively monitoring its forecast cash flows and
requirements. The Group is cautious in its approach, applying appropriate sensitivities to both the quantum and
timing of its projections.
A 1% increase in the GBP/USD foreign exchange rate, on the GBP denominated year end cash balances, would
result in a foreign exchange loss of $1k.
65
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
Liquidity risk
The Group manages its liquidity risk by ensuring that the balances of cash on deposit gives it sufficient access to
liquid funds to meet both its immediate and longer-term needs. In addition, the Group regularly reviews the access
to commercial bank lines of credit.
Capital management
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and
healthy capital ratios in order to support its current business, and allow it to take advantage of development
opportunities when they arise therefore allowing the Group to maximise Shareholder value at all times.
The Group manages its capital structure, primarily Shareholders’ equity, and makes adjustments to it, in light of
changes in economic conditions and development opportunities. To maintain or adjust the capital structure, the
Group may adjust the dividend payment to Shareholders, return capital to Shareholders or issue new shares. The
Group’s ordinary shares are quoted on the AIM market of the London Stock Exchange. This affords it access to
investors which seek access to growth opportunities of the sort which the Group is targeting to acquire.
Debt is not employed in the Group at present and the limited working capital requirements are currently financed
out of cash reserves. Details of the current equity structure can be seen on the Consolidated Statement of Financial
Position. There are no capital requirements that are externally imposed.
No changes were made in the objectives, policies or processes during the year ending 31 March 2023.
Trade and other receivables/payables
The directors consider that the carrying amount of these balances approximates to their fair value.
The only allowances maintained by the Company for credit losses relate to allowances for bad and doubtful debts
relating to trade receivables.
Categories of financial instruments
Financial liabilities and assets included in the Statement of Financial Position relate to the following IFRS 9
categories:
31 March 2023
Statement of Financial Position headings – liabilities
Trade payables
Social security and other taxes
Other creditors
Accrued expenses
Total
Financial
liabilities at
amortised cost
$000
Non-
Financial
Liabilities
$000
Total for
Statement of
Financial
Position
heading
$000
788
4
331
1,123
120
120
788
120
4
331
1,243
66
Statement of Financial Position headings – assets
Assets held for sale
Trade receivables
Prepayments
Other receivables
Cash and cash equivalents
Total
31 March 2022
Statement of Financial Position headings – liabilities
Trade payables
Social security and other taxes
Other creditors
Accrued expenses
Total
Statement of Financial Position headings – assets
Trade receivables
Prepayments
Other receivables
Cash and cash equivalents
Bank deposit
Total
Financial
assets at
amortised cost
$000
Non-
Financial
Assets
$000
Total for
Statement
of Financial
Position
heading
$000
2,184
98
-
67
5,351
7,700
-
-
72
-
-
72
2,184
98
72
67
5,351
7,772
Financial
liabilities at
amortised cost
$000
Non-
Financial
Liabilities
$000
Total for
Statement of
Financial
Position
heading
$000
1,381
-
51
237
1,669
-
194
-
-
194
1,381
194
51
237
1,863
Financial assets
at amortised
cost
$000
Non-
Financial
Assets
$000
Total for
Statement of
Financial
Position
heading
$000
3,250
-
86
3,296
1,500
8,132
-
201
-
-
-
201
3,250
201
86
4,796
1,500
8,333
The directors are of the opinion that there is no material difference between the book value and the fair value of any
of the Group’s assets or liabilities. The contractual maturity of all financial liabilities are as follows:
31 March 2023
31 March 2022
67
Within 3 months
$000’s
3 to 12 months
$000’s
12 to 18 months
$000’s
1,243
1,863
-
-
-
-
27. CAPITAL COMMITMENTS
Other than those included in the statement of financial position, there were no material capital or other financial
commitments in place at the year end. Further, there was no authorised but not contracted for capital expenditure
at the year end.
28. POST-REPORTING DATE EVENTS
The sale of the XXT related business assets occurred on 11 April 2023. A full description of this event has been
set out in the Combined Chief Executive and Chairman’s report on page 5.
68
Enteq Technologies Plc
Company Statement of Financial Position
Fixed assets
Tangible Assets
Investments in subsidiaries
Current assets
Trade and other receivables: amounts falling
due within one year
Trade and other receivables: amounts falling
due after one year
Cash at bank and in hand
Bank deposits
Total assets
Creditors: amounts falling due within one
year
Trade and other payables
Total net assets
Capital and reserves
Called up share capital
Share premium account
Share based payment reserve
Retained earnings
Total equity
Notes
3
4
5
7
6
6
8
9
9
As at 31
March 2023
$ 000's
As at 31
March 2022
$ 000's
46
-
46
2,589
-
5,071
-
7,706
34
-
34
6,372
6,828
2,651
1,500
17,385
(909)
6,797
(666)
16,719
1,080
92,037
448
(86,768)
6,797
1,072
91,919
432
(76,704)
16,719
The balance sheet takes into consideration the CA 2006 s408 exemption. The parent Company's loss for the financial year
was $10,180k (2022: profit of 403k). The financial statements were approved by the Board of Directors on 29 September
2023 and were signed on its behalf by:
Mark Ritchie
Director
The accounting policies and notes on pages 65 to 69 form part of these financial statements.
69
Enteq Technologies Plc year ending 31st March 2023
Company Statement of Changes in Equity
Called up
share
capital
$ 000's
Retained
earnings
$ 000's
Share
premium
$ 000's
Share
based
payment
reserve
$ 000's
Total
equity
$ 000's
As at 1 April 2022
1,072
(76,704)
91,919
432
16,719
Issue of share capital
Transfers between reserves
Share based payment charge
Transactions with owners
Loss for the year
Other comprehensive income for the year
Total comprehensive income
Total movement
8
-
-
8
-
-
-
8
-
209
-
209
(10,273)
-
(10,273)
118
-
-
118
-
-
-
(209)
225
16
126
-
225
351
-
-
-
(10,273)
-
(10,273)
(10,064)
118
16
(9,922,)
As at 31 March 2023
1,080
(86,768)
92,037
448
6,797
As at 1 April 2021
1,056
(77,324)
91,789
455
15,976
Issue of share capital
Transfer between reserves
Share based payment charge
Transactions with owners
Profit for the period
Other comprehensive expense for the year
Total comprehensive income
Total movement
16
-
-
16
-
-
-
16
-
217
-
217
403
-
403
620
130
-
-
130
-
-
-
130
As at 31 March 2022
1,072
(76,704)
91,919
-
(217)
194
(23)
-
-
-
(23)
432
146
-
194
340
403
-
403
743
16,719
The accounting policies and notes on pages 65 to 69 form part of these financial statements.
70
Notes to the Company Statement of Financial Position
For the year to 31 March 2023
1.
SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting
Enteq Technologies Plc is a Company incorporated in the United Kingdom under the Companies Act 2006. The
address of the registered office is given in the Company Information found on page 4.
Statement of compliance
These financial statements have been prepared in accordance with applicable accounting standards and in
accordance with Financial Reporting Standard 101 – 'The Reduced Disclosure Framework' (FRS 101). The
principal accounting policies adopted in the preparation of these financial statements are set out below. These
policies have all been applied consistently throughout the year unless otherwise stated.
Basis of preparation
The financial statements have been prepared on a going concern basis under the historical cost convention.
The board regularly reviews the Company’s resources to ensure they are sufficient to continue trading for the
foreseeable future. It is therefore considered appropriate to use the going concern basis to compile these financial
statements. The main requirement is for sufficient financial resources to maintain the overhead required to fulfil
the pipeline of business.
The financial statements are presented in US dollars as the majority of the Company’s subsidiaries’ activities and
transactions are in US dollars.
Management notes that the Company's strategy is to invest in services aligned to the oil and gas industry, an
industry which trades principally in US$. All future operations and sources of funding are also expected to be
located in the US for the foreseeable future.
As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the Company is not
presented as part of these financial statements. The Company’s profit is disclosed on page 68.
In preparing these financial statements the Company has taken advantage of the following disclosure exemptions
conferred by FRS 101:
• The requirements of IAS 24: related party disclosures to disclose related party transactions entered
in to between two or more members of the group as they are wholly owned within the group;
• Presentation of comparative reconciliations for intangible assets and property, plant and equipment;
• Disclosure of key management personnel compensation;
• Capital management disclosures;
• Presentation of a comparative reconciliation of the number of shares outstanding at the beginning
and at the end of the period;
• The effect of future accounting standards not adopted;
• Presentation of a cashflow statement;
• Certain share-based payment disclosures; and
• Disclosures in respect of financial instruments (other than disclosures required as a result of recording
financial instruments at fair value).
Foreign currencies
Foreign currency transactions are translated into the local currency of the Company, US dollars, using the exchange
rates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of
such transactions and from the remeasurement of monetary items denominated in foreign currency at year-end
exchange rates are recognised in profit or loss.
Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the
exchange rates at the transaction date).
71
Notes to the Company Statement of Financial Position
For the year to 31 March 2023
Tangible assets
Tangible assets are stated at cost less accumulated depreciation and any impairment in value. The initial cost of an
asset comprises its purchase price or construction cost, and any costs directly attributable to bringing the asset into
operation. The purchase price or construction cost is the aggregate amount paid and the fair value of any other
consideration given to acquire the asset.
The estimated useful lives are determined separately for each category and are as follows:
Computer equipment
Office equipment
3 years
1 year
A tangible fixed asset is derecognised upon disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the item) is included in the administrative
expenses in the year the item is derecognised.
Investments
Fixed asset investments in subsidiaries are shown at cost less provision for impairment.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly
liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant
risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements
entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company
after deducting all of its liabilities.
Trade and other payables
Trade and other payables are not interest-bearing and are recognised initially at fair value. Subsequently they are
carried at amortised cost.
Amounts due from or to group companies
Amounts due from or to group companies are initially recognised at fair value being the present value of future
interest and capital receipts discounted at the market rate of interest for a similar financial asset or liability. For
group loans which are due on demand or where there is no significant difference between the amount due/payable
and fair value on initial recognition then such loans are carried at the amount due/payable on an amortised cost
basis. Interest receivable or payable on the loan is recognised in profit or loss under the effective interest method.
The ability of the group entity to repay their respective balances are reviewed at the end of each reporting period
and the appropriate impairment recognised. As the only balance is with Enteq Technologies USA Inc. this
impairment review is based on the ability of this entity to generate cash in both the short and medium term.
Impairment provisions for receivables from related parties and loans to related parties are recognised based on a
forward looking expected credit loss model. The methodology used to determine the amount of the provision is
based on whether there has been a significant increase in credit risk since initial recognition of the financial asset.
For those where the credit risk has not increased significantly since initial recognition of the financial asset (“stage
1”), twelve month expected credit losses along with gross interest income are recognised. For those for which credit
risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised
(“stage 2”). For those that are determined to be credit impaired, lifetime expected credit losses along with interest
income on a net basis are recognised (“stage 3”).
Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
72
Notes to the Company Statement of Financial Position
For the year to 31 March 2023
Equity, reserves and dividend payments
Share capital represents the nominal value of shares that have been issued. Share premium includes any premiums
received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from
share premium, net of any related income tax benefits.
Retained earnings include all current and prior period retained profits. All transactions with owners of the parent
are recorded separately within equity. Dividend distributions payable to equity shareholders are included in other
liabilities when the dividends have been approved in a general meeting prior to the reporting date.
Share based payment reserve
Represents the total accumulated share-based payment charge less any amounts transferred following the issue of
the relevant shares.
Taxation
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered)
using the tax rates and laws that have been enacted or substantively enacted by the Statement of Financial Position
date.
Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the
Statement of Financial Position date where transactions or events that result in an obligation to pay more tax in the
future or a right to pay less tax in the future have occurred at the Statement of Financial Position date. Temporary
differences are differences between the Company’s taxable profits and its results as stated in the financial
statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in
which they are recognised in the financial statements.
Share based payments
All employees receive remuneration in the form of share-based payment transactions, whereby they render services
in exchange for rights over shares under the Enterprise Management Incentive Plan option scheme. The executive
directors and other senior managers receive remuneration in the form of share-based payment transactions, whereby
they render services in exchange for rights over shares under the Performance Share Plan. Both these schemes
have options that vest three years after the date of grant. The total amount to be expensed over the vesting period
of the options is determined by reference to the fair value at the date of granting and the number of awards that are
expected to vest. The fair value is based upon a Black-Scholes model taking into account different scenarios for
the possible outcomes of the Company's investment activities, using management's best estimates of these likely
outcomes. The total expense is based upon initial conditions and will crystallise smoothly over the vesting period
without reassessment of the initial fair value. The charge is annually reassessed, based on the total number of
options expected to vest. The movement in cumulative expense is recognised in the profit and loss, with a
corresponding entry to the share-based payment reserve.
On 17 September 2014, the Company introduced a Performance Share Plan (“PSP”) for the Executive Directors
and other key senior managers. The awards at the nominal value of the shares, but the exercise of which is subject
to certain performance conditions and is at the total discretion of the Remuneration Committee.
2.
LOSS FOR THE YEAR
As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the Company is not
presented as part of these financial statements. The parent Company's loss for financial year was $10,389k (2022:
profit of $403k).
73
Notes to the Company Statement of Financial Position
For the year to 31 March 2023
3.
TANGIBLE FIXED ASSETS
Cost:
As at 1 April 2022
Additions
31 March 2023
Depreciation:
As at 1 April 2022
Charge
31 March 2023
Net Book Value:
As at 1 April 2022
31 March 2023
4.
INVESTMENTS
Computer
equipment
$000’s
Office
equipment
$000’s
Total
$000’s
10
-
10
10
-
10
-
-
39
21
60
5
9
14
34
46
49
21
70
15
9
24
34
46
Cost
As at 1 April 2022 and 31 March 2023
Impairment
As at 1 April 2022 and 31 March 2023
Net book value
As at 1 April 2022 and 31 March 2023
Shares in
Group
undertakings
$000’s
23,285
23,285
-
The Group or the Company's investments at the Statement of Financial Position date in the share capital of companies
represent the following:
Name
Enteq Technologies USA Inc.
Country of incorporation
United States of America
Enteq Upstream Ltd.
Jeteq Drilling Limited
UK
UK
Nature of business
Manufacturer of down hole drilling
equipment
Dormant
Dormant
Holding
100%
100%
100%
The previously reported subsidiary, Jeteq Drilling Limited, was dissolved on 6 September 2022.
74
Notes to the Company Statement of Financial Position
For the year to 31 March 2023
5.
DEBTORS
Amounts falling due within one year:
Amounts owed by Group undertakings:
Gross amount owed
Provision
Prepayments
Accrued interest receivable
VAT recoverable
31 March 2023
$000’s
31 March 2022
$000’s
26,878
(24,405)
2,473
49
30
37
2,589
26,888
(20,679)
6,209
77
4
82
6,372
The management believe that the carrying value is an approximation of fair value. A carrying value exercise has been
conducted at the year end that shows that the net receivable from group undertakings is held at the appropriate value.
The directors review the intercompany receivables and loans on a regular basis, together with the associated cash
flows of each company, and assess under the expected credit loss (ECL) model as required by IFRS 9.
6.
CASH AT BANK AND IN HAND
Denominated in USD
Denominated in GBP
31 March 2023
$000’s
31 March 2022
$000’s
4,904
167
5,071
3,893
258
4,151
In addition to the above, as at 31 March 2022 there was an interest bearing bank deposit of $1,500k that matured on
10 January 2023.
7.
INTER-COMPANY LOAN NOTES
Receivable from Enteq Technologies USA Inc:
As at 1 April
Provision relating to the above
As at 31 March
31 March 2023
$000’s
31 March 2022
$000’s
37,928
(37,928)
-
37,928
(31,100)
6,828
The intercompany loans are charged at interest rates 3.71%. The loans are repayable at the lenders discretion
either quarterly on 31 March, 30 June, 30 September and 31 December each year or by the end of the term of the
loan which is 18 May 2027. The intercompany loans at present are considered to be in stage 2, and have been
assessed as indicated in the IFRS 9 ECL model and the balance has been fully provided for. As the loans are
considered to be in stage 2 a lifetime ECL is determined using all relevant, reasonable and supportable historical,
current and forward-looking information that provides evidence about the risk that the subsidiaries will default
on the loan and the amount of losses that would arise as a result of that default. Several scenarios and their
likelihood have been considered to calculate the expected cash flows for the loans and the expected credit losses
as at the reporting date. The intercompany receivable are interest free and on demand and are considered to be in
stage 3 and thus a lifetime ECL was applied.
75
Notes to the Company Statement of Financial Position
For the year to 31 March 2023
8.
CREDITORS
Trade payables
Accrued expenses
Social security and other taxes
31 March 2023
$000’s
31 March 2022
$000’s
565
331
13
909
421
227
18
666
The management believe the carrying value is an approximation of the fair value.
9.
CALLED UP SHARE CAPITAL
Allotted, issued and fully paid ordinary shares of GBP 0.01 nominal value:
As at 1 April 2022
Issued during the year
As at 1 March 2023
All shares issued carry the same voting rights.
10. RELATED PARTY DISCLOSURES
Number
000’s
69,014
710
69,724
Share
Capital
$000’s
1,072
8
1,080
Share
Premium
$000’s
91,919
118
92,037
Details of directors’ remuneration and other transactions are set out on pages 20 to 22.
11. ULTIMATE CONTROLLING PARTY
There is no ultimate controlling party.
76
Perivan.com
266974